Cowen Says to Buy Apple (AAPL) on Any Jabil (JBL)-Related Weakness

Cowen and Company sees opportunity in Apple (Nasdaq: AAPL) following Jabil Circuit's (NYSE: JBL) recent quarterly results.

After markets closed on Wednesday, Jabil Circuit reported Q2 EPS of $0.57 with revenue of $4.4 billion. The Street was looking for EPS of $0.60 and revenue of $4.5 billion. Jabil also guided for Q3 EPS of $0.12 - $0.18, with the consensus at $0.51.

Analyst Tim Arcuri commented today: While we do not cover JBL and are somewhat lukewarm on AAPL stock itself, to the extent AAPL or the component supply chain reacts negatively to this data point, we consider this a buying opportunity as we see this as a lagging indicator. The component supply chain was the first to see a correction in late Nov/Dec/Jan and the correction was swift and fast. Since that time, our monthly checks on component builds for both CQ1 and CQ2:16 have remained largely UNCHANGED with, in fact, some slight UPWARD revision very recently with a little more extended 6S/6S+ build and ~2-3MM iPhone 7’s now appearing for June based on our work. Overall, AAPL semis supply chain is still materially under-shipping consumption, although the gap which we estimate was ~15MM units in CQ1 is closing to ~5MM units in CQ2:16.

Cowen rates Apple at Market Perform with a price target of $125.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

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