Apple Stock Forecasted to Rise as Lifetime iPhone Sales Reach 1 Billion

Apple will report its fiscal third quarter earnings results tomorrow, and both the company and analysts project a year-over-year decline in iPhone sales and overall revenue for a second consecutive quarter.

iphone6design
Apple expects third quarter revenue of between $41 billion and $43 billion, which would be up to 18 percent lower than the $49.6 billion in revenue it posted in the year-ago quarter. The consensus among analysts is around $42.1 billion in revenue, which is essentially the midpoint of Apple's guidance.

Analysts estimate that Apple sold at least another 40 million iPhones during the June quarter, raising lifetime sales of the smartphone to some 987 million. Applying that sales rate to July -- just over 13 million iPhones per month -- it is likely that Apple will have sold its billionth iPhone between now and the end of this month.

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The milestone comes at a time when iPhone sales are on the decline for the first time since the smartphone launched in 2007, an arguably inevitable lull following the smash-hit success of the larger-screened iPhone 6 series. The decline has affected Apple shares, which are down around 21 percent from a 52-week high of $123.91.

Nevertheless, many Wall Street firms expect iPhone growth to resume in 2017. The good news could extend to Apple's stock, as The Wall Street Journal yesterday reported that its "shares have been punished more than enough" and are due for a rally. It said the decline in iPhone sales "appears priced in."

Still, Apple has been punished more than enough. The iPhone slump appears priced in. And while the next iPhone, expected later this year, likely won’t be a significant upgrade, there is optimism that sales growth will soon bounce back. Analysts forecast iPhone unit sales will rise 5% for fiscal 2017, which ends next September.

After briefly touching the $100 mark last week for the first time since early June, Apple shares are currently trading around the $98 mark, a price that some analysts feel undervalues the company.

Apple analyst Brian White of Drexel Hamilton reiterated his "buy" rating for AAPL today, based on a projected price target of $185. UBS analyst Steven Milunovich also issued a "buy" rating today with a 12-month price target of $115.

Apple is expected to introduce a wide range of new products in the second half of 2016 that could further raise its stock price, including the iPhone 7, Apple Watch 2, and long-awaited 2016 MacBook Pro.

Apple's third quarter earnings results will be released at 1:30 p.m. Pacific Time, followed by a conference call with CEO Tim Cook and CFO Luca Maestri at 2:00 p.m. Pacific Time. MacRumors will be providing live coverage of the news.

Update: BGC analyst Collin Gillis has, to the contrary, downgraded AAPL to a "sell" with a lower price target of $85. Apple shares are down nearly 1 percent in intraday trading, now hovering closer to the $97 mark.

Tag: AAPL

Top Rated Comments

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55 months ago
Preposterous numbers. I bet Ballmer's not laughing now.

Score: 17 Votes (Like | Disagree)
Avatar
55 months ago

2012 Samsung Galaxy S3 (Big screen)
2014 iPhone 6
2015 Samsung Galaxy S6 Edge
2017 iPhone 7 (Edge screen)
Samsung better come up with something new in 2017 or the iPhone will continue to decline in 2019

2012 Samsung Galaxy S3 (Laggy as hell)

2015 Samsung Galaxy S6 Edge (Still laggy as hell)

That's kind of what's important.
Score: 6 Votes (Like | Disagree)
Avatar
55 months ago

No, shares have not been punished enough, it will go down more after 3Q earning results. Iphone 8 with OLED is still too far away.

Given Apple has not warned otherwise, they will report numbers in line with guidance.

So, any disappointment would be a minor disappointment that will push the stock lower for some days, only to recover shortly after given the almost unbelievably low P/E.

But even a very small beat would translate into a much bigger leap up, that would continue down the quarter, because the stock is so severely undervalued now (current valuation assumes Apple's business would shrink 95% in 10 years, which is not realistic).

Summing up, it's riskier to bet against AAPL this time.
Score: 4 Votes (Like | Disagree)
Avatar
55 months ago

2012 Samsung Galaxy S3 (Big screen)
2014 iPhone 6
2015 Samsung Galaxy S6 Edge
2017 iPhone 7 (Edge screen)
Samsung better come up with something new in 2017 or the iPhone will continue to decline in 2019

Sorry, but nothing Samsung does makes me even think about buying one. I vowed to never buy anything with a Samsung label on the outside after having almost a whole batch of HDD's go bad within a few weeks. Had real issues getting the warranty honoured.
As for the Edge Screen, totally useless for me.
Score: 4 Votes (Like | Disagree)
Avatar
55 months ago
This is why I laugh at people claiming Apple is in trouble for relying on the iPhone for most of their revenue. Even if iPhone sales stop growing, Apple could still sell 250 million a year to people upgrading from 2-3 year old devices. Apple would have $150-200 billion in revenue just from regular upgraders. Companies would KILL to be in a position that generated that much cash flow and profit on a consistent basis.

Meanwhile, Google makes 90% of their revenue from ads, yet nobody calls them out for relying to heavily on one product category.


Oh, and there's one more huge difference between someone like Apple and Google. Apple makes money selling things people WANT/DESIRE. Google makes their money selling things (ads) people DESPISE. Pretty clear who's on shaky ground.
Score: 4 Votes (Like | Disagree)
Avatar
55 months ago

So its looking like smartphones in existance-

• 400m iPhones (approx)
• 1.4B android

Total 1.8B
World population 7.4B

about 1 in 4 of the World population own a smartphone.

That 400 million number is way too low. The last 3 years Apple has sold 590 million iPhones, and it's safe to say that those would all still be in use.
Score: 4 Votes (Like | Disagree)

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