JPMorgan: iPhone 5 To Restore Apple (AAPL)’s Investor Confidence

JPMorgan: iPhone 5 To Restore Apple (AAPL)'s Investor Confidence

JPMorgan Chase & Co. (NYSE:JPM) analysts have maintained their heavyweight price target of $675 on Apple Inc. (NASDAQ:AAPL), expressing their optimism in iPhone 5 sales for the next two quarters, notes Barron’s blog.

Mark Moskowitz notes that, data from the Asian electronics supply chain, obtained by his colleagues, supports his current outlook for iPhone shipments in the first couple quarters of next fiscal year.

Nonetheless, Moskowitz is well aware of Apple’s missed Q3 iPhone sales, as earlier featured in our post. He notes that, revenue miss experience during the quarter was nothing new. He points to the cyclical nature of Apple’s business, which results into volatility of sales.

However, he is of the opinion that the revenue stream will smooth out, as the company continues to build on customer penetration, which will help absorb the volatility of a new product cycle. “This point is highlighted, as the iPhone 5 is about a quarter from full volume ramp, and already it appears that Apple’s model is unable to absorb volatility related to product transition,” notes Moskowitz. Sterne Agee analysts were of the same opinion regarding the fluctuation of Apple’s sales which appears to be seasonal, as we earlier highlighted in another post.

Moskowitz believes that the company is in a good position, to produce over 20 million units of iPhone 5 during Q4.Consequently; Moskowitz expects improved iPhone 5 production units during Q1, and Q2 of the next financial year, with figures in the region of 39.4 million and 37.8 million units respectively. Moskowitz added that, his estimates could end up being an under estimation.

The JPMorgan Chase & Co. (NYSE:JPM) analyst is of the opinion that it is unlikely apple will face any shortfall in in key parts due to its massive consumption of the iPhone components and other products. He adds, “We think that a successful iPhone 5 launch is important to restoring investor sponsorship.”

In his conclusion, Moskowitz also notes on the increasing speculation over iPad Mini launch, saying, “there are increasing signs in the supply chain of a new and smaller form factor “iPad” to be potentially introduced later this year,” indicating that the JPMorgan analyst does, to some extent believe in the rumor, which suggest the iPad mini could arrive before the end of this year.

By close of market, yesterday, Apple Inc. (NASDAQ:AAPL) shares were down $3.95 per share or 0.7% decline to trade at $606.81.