Citi Lists Five Reasons Not to Be Spooked By Apple This Halloween

Seeking Alpha2022-10-12

Supply chain checks bolstered Citi's confidence in Apple (NASDAQ:AAPL) shares into earnings, analyst Jim Suva says.

"We are not fearful or concerned about Apple’s upcoming earnings report on October 27, despite media and investor concerns," Suva wrote in a note late Tuesday. "Apple shares have slightly outperformed the broader market, given better-than-feared results YTD, continued product launches, and positive news flow on consumer preference for higher ASP iPhone 14 Pro models."

Despite "investor & Halloween fears," there are five reasons to be positive, he said:

  1. "Checks suggest iPhone 14 build is still on track for 2H expectations of ~90mln units, and we expect a foldable phone in 2023"
  2. "Mix shift continues to skew away from lower-priced Android phones towards more midend and premium pricing products"
  3. "A ~$90 bln (~4% of current market cap) stock buyback, which lends support to shares"
  4. "Sticky services revenues and potential for more devices-as-a-service offering driving margins higher"
  5. "New product category launches such as AR/VR headsets and Apple Car in 2025+, not currently reflected in current estimates/market cap"

Suva keeps his Buy rating on the stock with a price target of $185.

AAPL is up 0.8% in premarket trading.

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