Societe Generale upgraded its view on Apple (AAPL, +0.17%) from “hold” to “buy” on 13 July in advance of the company's third quarter report due after close of business on 21 July. Societe Generale maintained its target price of $140.
An analyst note said that an estimated 5 million Apple Watches, which sell at $500 each on average, had been sold. In addition, the note said that iPhone sales of approximately 48 million, at an average price of $646 each, could also be anticipated.
Societe Generale also said that the Chinese market for iPhones, which accounted for an estimated 30% of total sales, was expected to exceed sales in the U.S. for the second quarter running.
Analysts at Societe Generale expect Apple sales to reach $50.2 billion with a gross margin of 39.1%.
They also added that the new iPhone 6S model, which is expected to debut in September, should enjoy a successful launch. Additional new Apple offerings, such as Apple Music and Apple Pay, are expected to add to revenues going forward.
The Street also reports that its rating team has upgraded Apple to “buy” giving the following analysis.
Apple stocks have jumped by 25.87% during the past year, significantly outperforming the S&P 500 index (SPX)for the same period. While a broad market decline would also affect Apple stocks, the price should continue its upward curve going forward.
Added to this, Apple has shown a consistent growth in earnings over the past two years with that quarterly report recording improved earnings per share of 40.4% over the same period the previous year. Apple increased its bottom line in the last fiscal quarter by $6.43 against $5.66 in the previous fiscal year. Market expectations are for an improvement to $9.03 against the previous $6.43.
Net income growth at Apple has been much higher than the S&P 500, but is less than the Computers and Peripherals average. There is a slight concern in the fact that despite the income growth, the company underperformed when compared with the industry average of 32.9% with revenues having grown by 27.1%.
MT4 Chart: Apple