Analysts at Goldman Sachs give Apple Inc. (NASDAQ:AAPL)’s price target a bump ahead of its next earnings report. They raised it from $620 to $635 per share and reiterated their Buy rating. Apple’s next quarterly report is due Jan. 27 after the markets close.
Apple’s outlook appears better
Goldman Sachs analyst Bill Shope said Apple Inc. (NASDAQ:AAPL)’s outlook is improved, particularly because of what looks to be a better-than-expected mix of the iPhone 5S and 5C as well as the iPad Air and iPad Mini. The analyst believes Apple will report 55.7 million iPhones shipped during the December quarter, plus 26.4 million iPads, 4.4 million Mac computers and 8.2 million iPods. He believes Apple Inc. (NASDAQ:AAPL)’s gross margin for the quarter will be 37.3%.
Looking ahead, Shope believes Apple Inc. (NASDAQ:AAPL) will report revenues of $45.92 billion for the March quarter and earnings of $11 per share. For the full 2014 fiscal year, the analyst raised his estimates from $185.2 billion in revenue up to $188.14 billion. His earnings per share estimate goes to $45.81 from $45.19 per share.
What to look for in Apple’s earnings
According to Shope, there are a few key ingredients investors should be watching when Apple Inc. (NASDAQ:AAPL) reports its earnings. He said gross margins for the December quarter will be especially important, but he’s positive on them because of the mix shift toward Apple’s more expensive iPhone and iPad models. He also said the company’s March quarter margin guidance will be important because it will provide a clue about whether Apple is making progress in improving costs as it ramps up production of its newest iOS devices.
Of course revenue guidance will also be important, along with details on how the deal with China Mobile could be affecting the March quarter. Usually the quarter is seasonally slow, but analysts from multiple firms have been hoping that China Mobile would provide a bit of a boost to the quarter.
A third item he will be watching is Apple Inc. (NASDAQ:AAPL)’s comments on how it believes product mix will trend in the early part of this year and whether that trend will put some pressure on its average selling prices.