CITI: iPhone sales are going to blow expectations away -- again

Apple’s second quarter earnings are coming up on April 27, and analysts at Citi think the company is going to blow away expectations.


Last quarter, Apple reported a record quarter with iPhone sales of more than 74 million as the company raked in more than $US18 billion in profit, the most profitable quarter in corporate history.

And as the world’s biggest company closes in on its next quarter, Citi’s Jim Suva expects Apple will beat expectations.

Here’s Suva’s breakdown of just how good Apple’s quarter is going to be relative to expectations:

  • Apple will beat revenue consensus by at least $US1 billion (expectations are for revenue of around $US55 billion)
  • iPhone shipments will beat expectations by at least 5%
  • Earnings per share will beat expectations by 2% even after factoring in an estimates -6% impact from the strong US dollar

Suva also expects that Apple will increase its capital return plans, upping its share buyback program to $US120 billion from $US90 billion, and increasing its dividend by at least 10%.

This note follows commentary from Piper Jaffray’s Gene Munster, who wrote in a note on Tuesday that Apple Watch sales will likely total 1 million units in its opening weekend.

Of course, there are always risks to any forecast, and the 3 big ones that Suva sees for Apple are:

  1. Apple Pay has only been rolled out in the US
  2. Currency adjustments will be a 6% drag on sales due to the strong dollar
  3. Declining iPad sales due to strong iPhone 6 Plus sales, which Suva says could be cannibalising some iPad Mini sales and disrupting the iPad upgrade cycle for consumers.

Citi has a “Buy” rating and $US145 price target on shares and has added the stock to its “US Focus List,” reserved for the firm’s highest conviction stock ideas.

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