By Carly Forster
Many investors are gearing up for Apple’s (NASDAQ:AAPL) first quarter fiscal 2015 earnings report scheduled to be released this afternoon, January 27th, after the closing bell. The company is expected to post earnings of $2.58 a share and $67.3 billion in revenue.
Sales of the iPhone 6 and iPhone 6 Plus are expected to be a main focus this quarter as the highly coveted phones were released towards the tail end of the prior quarter. In total, analysts expect the company to post 66.5 million iPhone units sold, marking a 30.4% increase year-over-year. Investors will be looking to see how the stronger dollar affected iPhone sales and demand trends of the devices moving forward. In addition, investors will be looking for an update on iPhone sales in China.
Another focus of Apple’s Q1 earnings report will be an increase in capital returns as the company produced more than $50 billion in free cash flow through the year ended in September. In the same quarter last year, Apple increased dividends by 8%, so investors will be looking to see if the company will announce a rise in dividends this quarter.
Cantor Fitzgerald analyst Brian White weighed in on Apple ahead of earnings on January 26th, reiterating a Buy on the stock with a $143 price target. The analyst raised his estimates on Apple earnings to $68.2 billion in revenue and $2.61 EPS from $65.5 billion and $2.49, respectively. White also raised his iPhone estimate to 67 million units sold; however, he fears the stronger dollar will be an issue, stating, “we expect the strength of the U.S. dollar against the euro, Japanese yen and other currencies to be a significant drag for Apple during 1Q:FY15 and beyond.”
RegardingiPhone sales in China, White noted:
“It was clear to us that the appetite for Apple’s new iPhones has been unprecedented with Apple struggling to keep up with demand, while there was a supply imbalance across mainland China for most of the quarter.”
Brian White has rated Apple 98 times since October 2010, earning an 81% success rate recommending the company and a +29.2% average return per recommendation. Overall, White has a 70% success rate recommending stocks and a +18.1% average return per recommendation.
Similarly, Piper Jaffray analyst Gene Munster reiterated an Overweigh rating on Apple with a $135 price target ahead of earnings. The analyst raised his estimate for iPhone sales from 61 million to 65 million. He noted:
“Regardless of whether Apple reports 65 million or significantly more phones, we believe the focus of the Dec-14 report will be on what the implied follow-through on iPhone growth is into the Mar-15 guide and ultimately through to the next product cycle.”
Gene Munster has rated Apple 128 times since January 2009, earning a 78% success rate recommending the company and a +30.6% average return per recommendation. Overall, Munster has a 71% success rate recommending stocks and a +28.0% average return per recommendation.
BMO Capital Markets analyst Keith Bachman also reiterated an Outperform rating on Apple with a $123 price target on January 26th, ahead of earnings. Despite his bullish rating, Bachman believes the company’s gross margin will be negatively affected by the rise of the US dollar, noting:
“FX is very difficult, particularly since we don’t know how quickly Apple adjusts end-user prices for FX (if at all). With that said, we believe that q/q FX movements negatively affected Apple translated prices by about 3.3% q/q.”
However, the analyst “think[s] component costs probably helped Apple’s gross margins in the December quarter” and “operating leverage helps Apple’s gross margins, but we are unclear on how to quantify the amount.”
Kieth Bachman has rated Apple 69 times since January 2009 with a 77% success rate recommending the company and a +35.7% average return per recommendation. Overall, Bachman has a 72% success rate recommending stocks and a +35.7% average return per recommendation.
On average, the top analyst consensus for Apple on TipRanks is Moderate Buy.
Disclosure: All recommendations for Apple sourced from TipRanks.