This Day On The Street
Continue to site
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

Why You Should Buy Apple Ahead of Earnings

The mix of iPhone 5s and iPhone 5c sales is the most important variable in the quarter, Huberty noted. She is assuming that the iPhone 5s, which has exceptionally strong margins, will account for 45% of all shipments, though she notes, "demand has been stronger than expected." For every 5% increase in 5s mix, Huberty notes it would add "$5 of ASP, 10bps of GM, and $0.16 of EPS."

For the quarter, she's expecting earnings of $14.30 a share on $55.6 billion in revenue, with gross margins coming in at 38.7%. Analysts surveyed by Thomson Reuters are looking for earnings of $13.80 a share on $55.4 billion in revenue.

Outside of the earnings number catalysts, Huberty is exceptionally bullish on Apple over the next few months. The upcoming iPad refresh, which is slated to happen on Oct. 22, "would give the product line a much needed boost after shipments fell Y/Y for the first time ever in the Jun Q," she wrote. Cheaper iPhones, such as the 5c, or a discount to the iPhones, would help earnings. It's important to note that while Apple doesn't discount its new products, some retailers, including Wal-Mart, Best Buy, and Target have been discounting the 5c.

Outside of hardware, Huberty notes that the new fingerprint sensor, TouchID, could herald new services to make the iOS ecosystem "even stickier and differentiated." The same could apply to iCloud Keychain and iBeacon, something akin to GPS for indoor locations. Apple acquired WiFi Slam, an indoor-GPS company , earlier this year for a reported $20 million.

One more thing Huberty is bullish on: that little thing called the iWatch.

-- Written by Chris Ciaccia in New York

>Contact by Email.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
AAPL $132.65 1.82%
FB $81.91 0.47%
GOOG $555.37 -1.71%
TSLA $231.55 6.01%
YHOO $44.36 -0.36%


DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs