Apple Inc Q2 Earnings Preview: Higher Profits, Strong iPhone Sales To Boost AAPL Stock

Apple Inc (AAPL) stock is expected to soar after the company will release its Q2 2015 earnings on April 27. Analysts predict that the strong performance of the iPhone and Mac over the second quarter ending in March will boost Apple’s numbers.

KGI analyst Ming-Chi Kuo said Apple will see moderate gains for the second quarter of the year. He predicted shipments of iPhone, iPad and Mac to be at 58.2 million, 10.1 million and 4.5 million respectively. In a note obtained by Apple Insider, he remarked that the first run of the Apple Watch is a good start with 631,000 units in the initial shipment.

Kuo believes Mac will be an area of “substantial growth” for Apple in the first half of 2015. He said the new 12-inch Macbook and the refreshed laptop line will push sales up 21.5 percent or 5.5 million units leading into the fall season.

As for the Apple Watch, the analyst feels it’s too early to determine the success of Apple’s first wearable device but his estimates are lower than the consensus of between 2 and 3 million units. Kuo said supplier labour shortages and insufficient production of key components have influenced his projections.

For three consecutive quarters, Apple’s profits have increased. Net income rose by 76 percent in the year-on-year comparison of the most recent quarter, reports Forbes. Apple’s Q2 2015 guidance estimates include revenues between $52 billion (AU$66 billion) and $55 billion with a 22 percent growth from the same quarter in 2014.

Majority of analysts still continue to rate Apple stock as a Buy. Apple shares are expected to get a boost, particularly if the company reports better than expected earnings.

Deutsche Bank analysts Sherri Scribner and Larry Zhong have raised their price target for Apple stock from $110 to $125 per share. However, they maintained their Hold rating since they believe Apple’s valuation is “fair at current levels.”

Apple had ended last quarter with $178 billion in cash and other investments. Based on the previous earnings reports, Apple’s cash is expected to increase. Analysts believe Apple will be the next trillion-dollar company if it continues to perform well in the market and the Apple Watch becomes another big hit.

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