Apple target slashed again, choppy waters expected in Q2

Apple Earnings Preview Q2 2013

Apple (AAPL) is set to post its results for the second fiscal quarter later this month and sell-side analysts are getting antsy yet again. RBC Capital Markets’ Amit Daryanani on Friday maintained his Outperform rating on Apple shares, but he trimmed his price target to $550 from $600 ahead of what he thinks may be a disappointing quarter for iPhone sales.

“We are lowering estimates on AAPL as our checks suggest AAPL saw weaker demand in March coupled with mix headwinds,” Daryanani wrote in a note to clients. “Furthermore, June-qtr guide could disappoint as iPhone sales may be lower than expected (product transitions). Positively, AAPL could update capital allocation policy and we focus on 1) iOS7 launch at WWDC, 2) iPhone5s and low-end iPhone and 3) Refreshed iPads.”

RBC now sees Apple reporting earnings of $9.59 per share on $41.2 billion in sales for the March quarter. His estimates come in under the Street’s consensus, which calls for a profit of $10.08 per share on $42.7 billion in revenue. Daryanani believes Apple sold 35 million iPhones last quarter, down from his earlier 37 million-unit estimate, along with 18.3 million iPads.

For the June quarter, the analyst now expects $8.72 in EPS on revenues of $37.3 billion with iPhone sales coming in at 28.6 million units and iPad sales hitting 19 million.

“We believe AAPL could see product momentum return in H2:13 as the Company unleashes a number of catalysts including: i. iOS 7 launch at WWDC, ii. iPhone 5s and Low-end iPhone in July, iii. iPad and iPad mini upgrades in Sept-qtr, iv. Carrier expansion – China mobile and others in Q3/Q4, v. potential iTV and/or iWatch launches,” Daryanani concluded.

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