Research firm BCG released earnings preview of Apple Inc. (NASDAQ:AAPL), saying the long waiting period for new Apple Inc. (NASDAQ:AAPL) products is becoming painful. BCG has a ‘Buy’ rating on the stock with a price target of $427.38.
Apple’s stock to perform better
In the report, the research firm mentioned that Apple’s stock has a total return of 7.9 percent since the last upgrade of April 22, as against SPX index’s total return of 7.7 percent. It is estimated that Apple Inc. (NASDAQ:AAPL) will perform better than the index in the second half of fiscal 2013, as there are a number of products lined up. However, almost negligible product launch in the fiscal 2013 is annoying. The Cupertino based firm has been reluctant in responding to customers wished features in the iPhone like larger display, low priced phones (new models) and the growing trend of subsidized/no-profit hardware.
Apple’s Estimates and guidance
For the June quarter, Apple Inc. (NASDAQ:AAPL) is expected to post increased revenue and EPS on Tuesday after the market closes. However, the September quarter is expected to be weak. Analysts at BCG are expecting revenue of $36 billion, increase of 2.8 percent yoy and decline of 17.4 percent sequentially. Revenue expectation of BCG analysts is greater than the average revenue expectation of $35 billion. Additionally, report is expecting EPS of $7.60 as against $9.32 in the previous year and $10.09 in the previous quarter.
BCG expects a total 28.5 million iPhones to be sold in the quarter. Total of 16.5 million iPads is estimated to be shipped and iPod units sold are estimated to be 5 million units. Analysts are expecting 3.9 million Macintosh to be sold, and gross margin is expected to be 37 percent.
Apple Inc. (NASDAQ:AAPL) has given guidance for the June quarter at $33.5 billion-$35.5 billion in revenue, gross margin of 36-37 percent, tax rate to be 26 percent, other income/(expense) of $300M and operating expense of $3.85 billion-$3.95 billion.
Concerns
In the research report, BCG has mentioned that Apple Inc. (NASDAQ:AAPL) may once again follow the March quarter trend, which has descent upside, but guidance for the June quarter was low. iPhone maker is about to launch some fresh gadgets that will affect the sales of old models, and inventory scarcity will affect the total shipment of the units. Current US dollar headwinds might also be a spoiler for Apple. Investors, according to the report, are looking forward to new product launches in the next half of the year.
Report further raised concerns over the launch of Motorola X on August 1, as analysts believe that Motorola will set a competitive price for Motorola X, and it will offer an alluring price value metrics. Rivals that are giving a tough fight to Apple Inc. (NASDAQ:AAPL), sell hardware to consumer at low/price and earn revenue through advertisement along with purchases of physical and virtual goods and services. In the research note, BCG said that repurchase program has been a positive move for Apple Inc. (NASDAQ:AAPL) and the stock has lingered in the stable zone since repurchase has been announced.
