Apple Inc. (NASDAQ:AAPL)’s next quarterly results are due on Oct. 28, and after strong sales indicators in September, analysts at Societe Generale have upgraded the company’s stock. They now have a Buy rating on Apple. Previously they had a Hold rating on it.

Apple Inc. AAPL

Expectations for Apple’s September quarter

Analysts Andy Perkins and Peter Knox provided their updated expectations for Apple Inc. (NASDAQ:AAPL)’s September quarter. They’re looking for $38 billion in sales, compared to consensus estimates of $36.7 billion and the company’s own guidance of $34 billion to $37 billion. They expect to see gross margins of 36.8%, compared to guidance of between 36% and 37%.

They believe earnings per share will be $8.30, compared to consensus of $7.90 and guidance of $6.80 to $8. The analysts said the biggest question in this next report will be the success about Apple’s new iPhone 5S and 5C.

More positive data points for Apple revealed

The analysts said they resisted the temptation to upgrade Apple Inc. (NASDAQ:AAPL) in September when it announced that a record 9 million iPhones were sold during launch weekend. They note that the number was “significantly” higher than they expected, but Apple didn’t change its guidance. They’re upgrading the company now because of additional positive data which has arrived over the last few weeks.

They saw strong rises from China and Taiwan, and they say both are “closely correlated” to Apple’s handset revenues. Specifically, they said manufacturers’ Hon Hai and Pegatron’s numbers were strong, which is good for Apple because most of these companies’ revenue comes from Apple. They also point to strong export data for China during September, which indicates a 30% increase in handset value year over year.

Also since the new iPhones were the only major handsets to launch recently, they believe the devices’ sales are driving most of that strength.

Apple doing well against Samsung

The analysts also note that prices for the iPhone 5S have remained strong, with “grey market” 5S prices hitting almost $1,000. They’re also seeing signs that Android and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) may be weakening against Apple. Today data from one firm indicated that Apple Inc. (NASDAQ:AAPL) outsold Samsung by a significant margin in smartphone sales during the month of September.

As a result of what appears to be higher volumes, they raised their iPhone sales unit forecast from 30 million to 34 million for the September quarter. Because of higher demand, they increased their gross margin estimate as well. These changes pushed their fiscal 2014 top-line up 2% and their gross margin to 44%, compared to 42% previously. For fiscal year 2015, they raised their gross margin estimate to 46%. Overall, they said these changes raised their 2014 earnings per share estimates 4% but by more than 10% after 2014.

Apple PT raised

The analysts raised their price target for Apple Inc. (NASDAQ:AAPL) from $500 to $575 per share. They said the key sensitivity right now is going to be margins. Just a 2 percent change in their operating profit assumption changes their target price by almost $40.

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