July 23 A rise in margins has raised hopes that
Apple Inc may be able to hold the line on pricing ahead
of the launch of new iPhones later this year.
Apple's shares were set to open slightly higher at $95.33.
At least six brokerages raised their price targets on the
stock by as much as $12 to a high of $123.
Apple's gross margin rose to 39.4 percent in the third
quarter from 36.9 percent a year earlier, and the company
forecast margins of 37-38 percent for the current quarter.
IPhone sales tail off in the quarters before a new launch,
usually in September, as potential buyers hold off purchases.
"With (gross margins) stabilizing (year-on-year) and core
demand trends solid, we think investors will want to own Apple
stock (going) into bigger-screen iPhone 6 and
ecosystem-expanding iWatch/iBand launches," Evercore Group
analysts wrote in a note on Wednesday.
The world's most valuable technology company forecast
revenue of $37 billion-$40 billion for the current quarter,
lower than the average analyst estimate of $40.44 billion,
according to Thomson Reuters I/B/E/S.
Apple did well in a seasonally soft June quarter and gave a
"good enough" outlook, but investors are focusing more on the
launch of new products, the deal with China Mobile Ltd
and a push into the enterprise market with IBM Corp,
Cantor Fitzgerald analyst Brian White wrote in a note.
Apple launched its iPhone on China Mobile's network in
January and partnered with IBM this month to sell iPhones and
iPads loaded with applications geared at enterprise clients this
"The bottom line is that the iPhone 6 reception is what
matters right now (the iWatch is also expected to come this
year, but we expect very limited supply)," Macquarie Capital
(USA) Inc analysts wrote in a note.
Macquarie maintained its "outperform" rating on Apple's
stock, but raised its price target to $102 from $95.
Of the 53 analysts covering the stock, 43 have a "buy" or a
higher rating, 9 have a "hold" and just one has a "sell" rating,
according to StarMine data.
Analysts expect a staggered launch of new iPhones, with a
4.7-inch flagship launching late September, followed by a
5.5-inch phablet around November, apart from any new products
such as an iWatch.
Evercore analysts said they expected Apple to sell about 37
million iPhones across models in the September quarter and 62
million in the December quarter, driven by pent-up demand for a
larger-screen iPhone 6.
"We believe that a larger screen iPhone, combined with
Apple's strength in software and ecosystem, will be well
received in the market and will drive unit growth," BMO Capital
Markets analysts wrote in a note.
Apple's shares, which closed at $94.72 on the Nasdaq on
Tuesday, have risen about 55 percent in the past 12 months.
(Reporting by Supantha Mukherjee in Bangalore; Editing by Kirti