Analyst: AAPL Q1 Earnings Hint at Early iPhone Launch

| Apple Stock Watch

Canaccord Genuity analyst Michael Walkley looked at Apple's March quarter expectations, and while he called it "soft," he also saw it as a possible hint that an new iPhone model is coming soon.

Mr. Walkley said,

We believe the soft March quarter guidance was due to Apple ramping supply of the iPhone 5 during the December quarter to high inventory levels, combined with the potential for an earlier than usual product transition during [the first half of 2013] for the iPhone.

Q1 AAPL Earnings report hints at early iPhone launchApple reported a record breaking US$54.5 billion first quarter revenue and $13.1 billion profit on Wednesday. 47.8 million iPhones and 22.9 iPads made up the lion's share of the 75 million iOS devices sold during the quarter, and Mac sales came in at 4.1 million units.

Apple's first fiscal quarter numbers were mostly inline with Mr. Walkley's estimate of $55.4 billion in revenue. The company's 38.6 percent gross margin was close to his 39.1 percent estimate, too.

Rumors have been circulating about a spring iPhone launch, and some claim a bigger screen size model is on the way, along with a low cost model. While the company doesn't typically respond to rumors, executives have said that cheap iPhones aren't something they're interested in.

What the company didn't say, however, is whether or not Mr. Walkley's interpretation of the earnings numbers really means a new iPhone model is coming soon.

Apple's new guidance is an opportunity for investors, according to Mr. Walkley. "With Apple returning cash to shareholders through its dividend of $2.65 per share payable February 14, 2013 and its buyback program, which started on September 30, 2012, combined with our expectations Apple will return to year over year growth in the June quarter, we believe the potential weakness today represents a compelling entry point," he said.

The softer numbers from Apple come with a price, even though Mr. Walkley expects we'll be an iPhone refresh soon. He lowered his fiscal 2013 EPS from $50.25 down to $45.70, and for fiscal 2014 his EPS is now $53.68, down from $57.45.

Mr. Walkley is also lowering his target price for Apple's stock to $650 from $750, but maintained his "Buy" rating. Apple is currently trading at $463.38, down 50.62 (9.85%).

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