Demand will be strong despite the likely shipping delays for a premium model, BMO says.

BMO Capital lowered third quarter revenue estimates and EPS for Apple Inc (AAPL - Get Report) on concerns that shipments of the upcoming premium iPhone Pro will be limited initially.

Apple will likely release the premium iPhone "Pro" along with a standard "S" refresh in September, but production of the expected OLED display will delay shipments. BMO lowered its average selling price assumptions for the premium iPhone Pro to reflect its limited volume view.

Analysts also cut their 2017 fiscal year EPS estimate for Apple to $8.90 from $9.09, just higher than the consensus of $8.88. Their Q3 revenue is about $300,000 below Wall Street's consensus. Analysts said production will likely "ramp steadily" after Q3, though, and raised their outlook for 2018.

Demand will be strong despite the likely shipping delays for a premium model, BMO said. They raised their shipments outlook to 43 million from 34 million for the first four quarters of availability.

BMO reiterated an "outperform" rating for Apple, with a price target of $170. Their target implies a 13% upside for the stock, which traded down 0.5% Monday afternoon.

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