Apple Inc. (NASDAQ:AAPL) will release its FYQ4, 2014 results on Monday, Oct.20 after the market close. Investor expectations are pretty high as it will also include the sales of the latest iPhone 6 and 6 Plus until September. The new iPhone sales have been strong all over. Wall Street expects the company’s Q4 revenue to rise 6.30% from $37.47 billion to $39.83 billion. Earnings are expected to jump from $1.18 per share (split adjusted) to $1.30 per share.

Apple Inc. (AAPL) Q4 Earnings Preview
Source: Pixabay

Apple’s (AAPL) gross margins may go up

Goldman Sachs analyst Bill Shope said in a research note that investors will particularly focus on gross margin guidance for December quarter. Shope expects September as well as December quarter gross margins to stand at 37.9%. In fact, the research firm says Apple Inc. (NASDAQ:AAPL)’s gross margins may improve in coming quarters. That’s because of the lack of sapphire display in iPhone 6, better than expected sales of higher storage variants (64GB and 128GB) and consistent cost reductions for standard components.

Goldman Sachs forecasts Q4 revenue of $39.27 billion versus Apple’s guidance of $37-$40 billion. The research firm expects EPS to come in at $1.28. Goldman Sachs said results are likely to be biased to the upside with solid initial demand for the iPhone 6 and 6 Plus. For December quarter, Bill Shope forecasts revenue of $62.65 billion with $2.43 in EPS.

China launch to boost Apple’s performance in December quarter

Apple Inc. (NASDAQ:AAPL) sold a staggering 10 million new iPhones during the first weekend. That’s impressive considering the initial release didn’t include China, the world’s largest smartphone market. The iPhone 6 in China was delayed due to regulatory approvals. The devices have been approved, and will go on sale in the country on Oct.17. China launch will boost Apple’s performance in December quarter. Goldman Sachs expects the tech giant to sell 62 million iPhone units in December quarter.

However, the research firm says the iPad business likely continued to struggle in September quarter. The iPad sales declined YoY in March and June quarters. The launch of 5.5-inch iPhone 6 Plus will further hamper the iPad sales as it will serve the purpose of both a smartphone and a tablet. Apple Inc. (NASDAQ:AAPL) is expected to refresh its iPad line at its October 16 event.

Goldman Sachs has a Buy rating on Apple Inc. (NASDAQ:AAPL) stock with $115 price target.