Goldman Sachs on Apple: Bumpy quarter ahead

It’s all about the guidance.

From a note to clients by Goldman Sachs analyst Simona Jankowski that landed in my inbox Wednesday:

What’s changed: We expect the market’s focus for Apple’s earnings report on Aug. 1 to be almost entirely on its guidance ahead of the much-anticipated iPhone 8 launch. While we expect F3Q (June) to be in line to slightly better, F4Q guidance has the potential to be highly volatile, depending on the exact timing of the launch. While Apple typically launches in 2H Sep, the potentially significant redesign of the new phone has given rise to concerns that shipments could be delayed to October due to supply chain bottlenecks.

Implications: To help investors infer the timing of iPhone 8 shipments based on F4Q rev. guidance, we review three scenarios:

  • Apple guides below $48 billion: October launch
  • Apple guides between $48B and $50B: Sept. 29 launch
  • Apple guides between $51B and $53B: Sept. 22 launch

While the exact timing could increase near-term volatility, we recommend staying long Apple shares into the product cycle, as we see significant EPS upside in FY18.

Reiterate Buy and $170 price target. 

UPDATE: For friend of the blog Dave Emery.

5 Comments

  1. David Emery said:

    I’m sure the photo has some relevance, but I’m not getting it (I’m not much of an old film buff.) Is that Betty Davis?

    1
    July 12, 2017
    • Fred Stein said:

      It is. The quote, “fasten your seatbelts it’s going to be a bumpy night “

      2
      July 12, 2017
      • David Drinkwater said:

        The “look up” function on the quotation worked remarkably well, returned a relevant photo and the title of the film: All About Eve. Cool.

        1
        July 12, 2017
  2. Fred Stein said:

    Wake me when it’s over.
    Lazy summer days; Slack season for Apple; Apple in quiet period; Rumors plus hypothetical prices “could start at 1500” based on rumors (Gruber), price targets of $130 without showing DCF (Sherri of Duetsche); Etc.
    I”m happy with Simona’s $170 target. And happy waiting till the market agrees.
    Bumpy ride = better prices for buybacks.

    1
    July 13, 2017
  3. David Emery said:

    Thanks, all, for the education and PED for the film clip.

    0
    July 13, 2017

Leave a Reply