This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why You Should Buy Apple Ahead of Earnings

Stocks in this article: AAPL

NEW YORK ( TheStreet) -- Apple (AAPL - Get Report) is set to report fourth-quarter earnings, and given the hype and hoopla surrounding the iPhone 5s/5c and what's in store with next week's iPad event, it's going to be a doozy of a report. One analyst is making a very bold call, saying shares should be bought ahead of the print.

Morgan Stanley analyst Katy Huberty, who rates shares "overweight" with a $540 price target, notes that "Apple is becoming a clean story again with upside to our estimates, signs of meaningful innovation in iOS 7 and 5s, strong positioning for the next computing cycle (IoT), and rebuilding of the management bench all signs of a positive trajectory in FY14," she wrote in her report. "We are buyers into a strong Sep Q print."

Huberty expects exceptionally strong numbers for the September quarter, due in large part to the popularity of the iPhone 5s. She expects 34.5 million iPhones to be sold in the quarter, but adds that this number could have reached 37 million, if not for supply constraints. That would allow Apple to earn $8 a share, generating gross margins of 37% and $37 billion in revenue.

Meanwhile, Wall Street analysts surveyed by Thomson Reuters expect the Cupertino, Calif.-based firm to earn $7.88 a share on $36.76 billion in revenue. When Apple announced it had sold over 9 million iPhones in the opening weekend of availablity, it raised guidance. "Apple expects total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range of $34 billion to $37 billion, and expects gross margin to be near the high end of the previously provided range of 36% to 37%," the company said in an SEC filing.

As for the all-important holiday season, Huberty expects a monster number, particularly iPhone sales. She predicts that 55 million iPhones will be sold in the December quarter, above Wall Street's projection of 53 million. Last holiday quarter, Apple sold 47.8 million iPhones, so if the 55 million number is hit or exceeded, that would mean 15% year-over-year growth.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs