Analyst Jeriel Ong thinks the iPhone will be delayed, but still believes Apple is the best name to own in the information technology space.
From a Monday note to clients that landed on my desktop Wednesday:
While we expect a strong fundamental report from AAPL, we believe that the strong intra-quarter move in the stock price (+30% since 5/1, twice the S&P500) sets up a high bar for AAPL to hurdle, especially with the company trading at ~23x CY21 EPS and fundamental estimates relatively unchanged intra-quarter.
A big question, to us, is whether AAPL provides Sept-qtr guidance (last quarter cited “lack of visibility and certainty”, but hasn’t that gotten better?), which would easily signal whether iPhones are delayed beyond their typical “last week of September release” or not.
We believe they are in fact delayed, believe its the highest probability option, and recently adjusted estimates to model Sept/Dec-qtr below seasonal and Mar-qtr above seasonal to account for the scenario.
We believe that fundamentals are increasingly necessary to drive the stock higher from present levels and believe that this earnings report will be the first of a series of markers to drive stock upside. Long-term, we continue to believe that AAPL is the best name to own in the IT Hardware landscape. While AAPL’s intra-quarter stock rise and subsequent valuation expansion does have us somewhat nervous, we remain confident in our Buy rating and $400 P/T.
Maintains Buy rating and $400 price target.
My take: An analyst of little faith.