Zachs Rates AAPL Neutral on Potential iPhone Competition

| Apple Stock Watch

Zachs analysts are rating Apple's stock as Neutral ahead of Tuesday's third fiscal quarter earnings report. The firm sees the upcoming iPhone 6 and rumored iWatch as big sellers for the company, but competition in the smartphone space will have an impact on Apple's bottom line.

Zachs rates AAPL as NeutralZachs rates AAPL as Neutral

In a note to investors, Zachs said,

The upcoming iPhone 6 will drive the top line in 2015. The company is also expected to announce iWatch by October, which will be a game changer, in our view. Apple's growing market share in the BRIC and emerging markets is a major positive. Although iPad reported a dismal quarter, its growing adoption in enterprises and education sector is a significant growth catalyst. Moreover, the availability of Microsoft Office on iPad will further boost sales.

"Dismal" is a relative term in that the company sold 16.35 million iPads during its second fiscal quarter. That number was down 16 percent year-over-year and down 37 percent compared to Apple's first fiscal quarter, but still ahead of other tablet device makers.

Zachs expects Apple's China Mobile deal to help sell even more iPhones, and the firm thinks Apple's recent partnership with IBM will help increase iPhone and iPad sales, too.

Competition, however, will be more intense. "Apple continues to face significant competition from Asian handset makers such as Samsung and Lenovo's acquisition of Motorola will further intensify competition," Zachs analysts said. "This will further hurt its ASP, in turn negatively affecting gross margin."

Zachs's "Neutral" rating for Apple's stock comes with a US$98 target price. Apple is currently trading at $94.02, down 0.41 (0.43%).

[Thanks to Ticker Report for the heads up]

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Comments

Constable Odo

It’s funny.  Apple will always have iPhone competition so there’s no chance of Apple shareholders ever getting a break.  That sounds like the kiss of death for Apple shareholders.  What Zachs is saying is that maybe it’s better for Apple to find some other revenue streams that have nothing to do with iPhones or the company’s value won’t improve.

Piper Jaffray’s Munster says the Apple/IBM deal won’t significantly boost iPhone or iPad sales, but Zachs say the deal will definitely sell more iPhones and iPads.  There definitely is a difference of opinion on that point.

jhorvatic

And others like UBS, JMP up Apple price to $115, $135 respectively. Competition is relative and will always be there. Zachs is just another stupid bunch of anal-ist with there heads in there a$$. If they look at the real data they would see both the iPhone 5S and the 5C are beating the likes of Samsung and others after they already announced there new products. Samsung had a dismal quarter and there top of the line Galaxy S5 sales have flopped compared to Apple’s iPhone’s which after a year are selling just as well. And with new products to be announced soon and new software like Yosemite and IOS8 out soon there expectations are way WRONG! iPad sales have been stronger than any competitor, maybe not record breaking but still better. So put that in your anal opinion and smoke it Zachs.

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