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April 16 2015, 09.30am GMT


Earnings season is upon us with the biggest company by market cap set to report their earnings next week. What do analysts predict about Apple?

With the release of the Apple Watch creating the much anticipated bustle around Apple Inc. (NASDAQ: AAPL), analysts have shared their sentiment on what to expect from this tech giant when they report first quarter earnings on the 27th of April.

While Apple shares declined 0.6% on Tuesday morning to trade at $126.01 a share, analysts at the Argus Research Group have reiterated their Buy rating for Apple and they also raised their price target from $135 to $145. Without the dividend, this translates into 15 percent increase.

Adding to this, Argus also has an additional price target which is based on a two state discounted cash flow model. This would put Apple shares over the $200 mark. The official price target is a clear indication of the successful sales of iPhones globally as well as an increased demand for the Mac which was evident during the first quarter of this year. Based on this, Argus forecasts that iPhone sales in the first quarter will be at 56.0 million, pushing revenue to $38.2 billion. This is higher compared to last quarter’s sales of 53.0 million iPhones on revenue of $35.5 billion.

With such high expectations around iPhone sales, Argus has raised its fiscal year earnings forecast in 2015 from $8.55 to $8.78 per share. The fiscal year forecast for 2016 was also raised from $9.10 a share to $9.44 while the forecast for the long-term EPS growth rate remained unchanged at 13 percent.

Meanwhile, Argus does not share the same positive sentiment on the Apple Watch saying that it may be slightly irrelevant or even a little negative to the earnings for the 2015 fiscal year. On the upside, the impact of the Apple Watch release keeps the company on top of consumer’s minds and also relevant in the market which is positive entering into the slow summer months before the fall brings in new product launches.

While the shift of the Apple price target to $145 is positive, Apple investors are hungry to see the tech giant push over the $200 mark. Should this happen, we could see Apple’s market cap rise from the current $735 billion to $1.2 trillion.

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