Goldman Sachs Bullish on Apple Inc. (AAPL) and iPhone 7

Apple Inc iPhone (AAPL)

Apple Inc. has been reiterated with a ‘conviction buy’ rating by Goldman Sachs who cited an expected earnings beat and high projected demand for the next iPhone from the firm. In a survey, Goldman found that 44% of the respondents plan to buy the upcoming iPhone 7, which is expected to be released during the fall.

Goldman bullish on Apple

 It is believed that one-third of the upgrades will come from users, who own iPhones that are less than a year old, thus shortening the replacement cycle. Goldman’s survey indicated that about 25% of the iPhone 7 sales will come from people, who will make the switch from other platforms such as Android, and this suggests that Apple will continue to gain market share.

Apple Inc (AAPL) iPhone 6s Deals

“This implies a shortening of the replacement cycle, as a third of upgrades are expected to come from current generation (<1 year old) iPhones. In addition, it reflects a high number of iPhone 7 sales to switchers (near 25%) from other platforms such as Android, suggesting that Apple will continue to gain share,” Goldman noted.

Apple Inc. is scheduled to report quarterly results on April 25 after the bell. Apple will expectedly enter an upward estimate revision cycle, added Goldman. The research firm models iPhone units at 53.6m versus the consensus at 50m, and this drives them above consensus view.

“We expect a beat and raise quarter from Apple, with revenues of $54.4bn (vs. consensus at $52.0bn and guidance of $50-53bn) and EPS of $2.17 (vs. consensus at $2.00). Our above-consensus view is driven by iPhone units, which we model at 53.6mn vs. consensus at 50.0mn,” Goldman says.

It is expected that Apple will release the newest model of its flagship device later this year. Apple’s conviction buy rating means that Goldman ranks the iPhone firm among its top-recommended stocks. Goldman has a $155 12-month price target on Apple shares. On Tuesday, Apple shares closed up 1.3% at $110.44. Year to date, the stock is up almost 3% while in the last one-year, it is down over 13%.

One of the best new features

Tablets might have failed to get people excited, and even the Apple’s latest iPad Pro – a replacement of the iPad Air – has not been able to inspire much interest. However, the latest tablet from the firm comes with a component – Real-life display performance – that if adopted in the upcoming iPhone 7 – to be released later this year – can make it possible for Apple to overtake Samsung.

A recent report in Display Mate noted that the OLED display of the Galaxy S7 is the best available smartphone screen beating all its rivals including the iPhone 6S. Later, Display Mate’s expert Raymond Soneira returned with a detailed analysis of the iPad Pro’s screen, and the conclusion offered was not at all surprising. The iPad Pro 9.7 sports an LCD, which is better in every way than all the iPad screens including the 12.9-inch model.

As per Soneira, the display used in the tablet is the best performing mobile LCD display that they have ever tested. The new iPad Pro comes with an inventive low reflectance screen, which use a new anti-reflection AR coating, reflecting only 1.7% of the ambient light by using. This is one of the highlights of the product.

The low screen reflectance of this Apple Inc. device is the lowest by far of any mobile display, and for this reason, its image colors and contrast in high ambient appears considerably better than any other mobile display. Such a remark from Soneira is crucial since it appears that the iPad Pro has the best screen reflectance, and is better than any competing device including the Galaxy S7.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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