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 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]