Apple 'resilient' in Q3 earnings with future focus still on 5g 'iPhone 12,' Cowen predicts

Investment bank Cowen expects Apple to release June quarter results in line with the broader Wall Street consensus, and adds that the services and the upcoming 5G “iPhone 12” will boost the momentum of the company in the future.

In a note to investors seen by Appleiphonestop, analyst Krish Sankar says that Apple’s strong position stems from the upcoming “iPhone 12” cycle as a catalyst for 2021 results; the fact that the Services segment remains resilient compared to hardware products; and the company’s free cash flow remaining “robust” during the coronavirus.

Apple is expected to hold its third-quarter earnings report and call investors at 2 p.m. Pacific (5 p.m. EST) on Thursday, July 30.

Although the analyst said Apple may choose not to issue guidance for the September quarter, ownership of Apple shares is actually about “the opportunity for long-term service growth and the upcoming iPhone 5G cycle. “.

Credit: Cowen

“The service segment remains a bright spot, and Mac demand could see a boost in the back-to-school period,” Sankar wrote. The analyst expects Apple to report 23% sales growth from the previous quarter and a total of 40 million iPhone units shipped.

For the quarter as a whole, the analyst expects revenue of $ 50.18 billion, with $ 13.2 billion in service revenue and $ 21 billion in iPhone revenue, roughly online with the Wall Street consensus. On average, analysts who track Apple’s sales expect the company to declare $ 51.47 billion in this call. This compares to $ 58.3 billion in the fiscal second quarter of 2020, although traditionally Apple’s fiscal third quarter has been the weakest time of year for the company.

Cowen says Apple has about $ 93 billion remaining in its current share buyback program. Sankar expects buybacks to trend towards $ 10 billion per quarter for the remainder of 2020.

Sankar’s forecast indicates that iPhone shipments will decline 12% year-over-year in 2020. But, given the expected strength of iPhone 12 and 5G, Sankar estimates that fiscal year 2021 will see a 20% increase over 2020 sales figures.

Cowen’s 12-month AAPL price target remains unchanged at $ 400, which had increased from $ 335 in June. This target was based on a mixed multiple of 25x and an earnings per share rating of $ 15.78 for 2021.

AAPL shares were trading at $ 377.18 on the NASDAQ on Monday morning, up 1.83% in intra-day trading. Since the start of July, Apple’s share price is up 3.64% overall.

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