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Apple Inc. (AAPL): Citi Still Bullish Though Lowers Estimates

By Kate George 

Apple Inc. (NASDAQ:AAPL) has been in the news for its latest iPhone 6S and 6S Plus. The company sold 13 million units over the launch weekend; a 30% increase over the 10 million iPhone 6 and 6 Plus units sold a year ago. While these numbers are strong, this year’s figures also include sales from China, which were not included in the prior year. Analyst Jim Suva from Citi weighed in with bullish sentiments.

Yesterday, Suva maintained a Buy rating for the stock with a price target of $145. However, Suva lowered his EPS estimate for the September quarter to $9.06 from the earlier estimate of $9.14 after he shifted some iPhone sales to the next quarter. For the September quarter, Suva estimates iPhone sales of 47 million, lower than the consensus estimate of 48 million because sales of only two days – Friday and Saturday – of the weekend launch will be counted in the current quarter.

Suva expects various other sell-side analysts to do the same and lower their estimates for iPhone sales in the September quarter. Apple is scheduled to report its earnings on October 27.

Suva also expects the volatility in Apple’s stock to continue. Given the limited upside potential of sales and earnings in the near term, he expects some investors to exit the stock.

As per Suva, “The investment thesis for Apple is likely to shift from an iPhone ‘beat and raise’ investment story to a gross margin upside story heading into a difficult comp year for iPhone 6S unit sales.”

The analyst concludes that any pullback from current levels will be a good buying opportunity for long-term investors.

As per TipRanks’ statistics, out of 38 analysts who have recently rated Apple’s stock, 28 have rated it as a Buy, 9 have rated it as Hold, and only 1 has rated the stock as Sell. The average consensus price target for Apple is $147.26; marking an upside of nearly 33% over current levels.