Apple Inc. (NASDAQ:AAPL) is scheduled to report its fiscal Q2 (March) earnings results on Tuesday, April 23, after the close. Analysts estimate revenue of $41.4B (up 5.6% from $39.2B last year), and EPS of $9.73 (down 21% from $12.30 last year). Analysts at CrowellWeedon & Co. have lowered their fiscal Q2 and Q3 revenue and EPS estimate to reflect 1) recent comments from Apple Inc. (NASDAQ:AAPL) component suppliers suggesting slowing orders in advance of a potential product transition and, 2) the lack of a formal iPhone agreement in China with China Mobile.

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However, analysts from research firm CrowellWeedon & Co. continue to believe Apple Inc. (NASDAQ:AAPL) shares are substantially undervalued trading at 9.1x their FY’13 EPS. In addition Apple Inc. (NASDAQ:AAPL) continues to generate industry leading cash flow (trailing 12-month free cash flow of $47.5B and adjusted EBITDA of $61.1B (37% of revenue). Apple’s Enterprise Value of $236B is just 3.9x that trailing EBITDA number. Analysts estimate flat EBITDA over the balance of the year ($61.5B), which reflects this year’s lower margins but still highlights Apple Inc. (NASDAQ:AAPL)’s strong operating results and ability to generate cash.

According to analysts’ estimate Apple Inc. (NASDAQ:AAPL)’s cash & investments, $137B at 12/31/12, could exceed $150B by 9/30/13. TTM Revenues from smartphones (iPhone) and tablets (iPad) were $118B, 72% of total revenue and remain growth markets. Analysts at the firm continue to believe multiple catalysts exist after the Q2 report. Potential catalysts include 1) a substantial dividend increase and share repurchase program, 2) new products for the iPhone, iPad, and others, 3) a formal agreement to sell iPhones to China Mobile subscribers. While Apple Inc. (NASDAQ:AAPL) fear and uncertainty remains at high levels, analysts believe owners of the shares will be rewarded from current levels.

Apple’s iPhone, iPad Estimations

Analysts estimate Q2 iPhone units of 35.8mm units compared to 35.1mm last year, For Q3 (June) they estimate iPhone units of 32.2mm, reflecting a sequential decline. For iPad units analysts estimate 19.6mm Q2 units, up from 11.8mm last year. Their full year estimates are for iPhone units of 152mm (vs. 125m last year) and iPad units of 81mm, up from 58mm.

Analysts lower EPS estimates for the year despite revenue growth is due to reduced gross margin assumptions (38% this year vs. 44% in FY’12) and reflect higher sales of lower margin iPads and iPad Minis. They view FY’13 as a transitional margin year for Apple Inc. (NASDAQ:AAPL) as the FY’12 level was not sustainable. Analysts believe that additional modest margin declines are now anticipated by the market.

In their view the current price discounts the potential for Apple Inc. (NASDAQ:AAPL) to introduce a lower priced (and lower margin) iPhone for China and other emerging markets. Analysts view such an announcement as positive.

Given analysts reduced estimates (fiscal 2013 EPS now $43.41, analysts’ prior estimate was $45.38) and uncertainty over new product timing, the firm have reduced their near-term (12 months) price target to $625 (from $725).