Apple (AAPL) Q2 Guidance 'Seems Doable'... Sees Risk to Q3 Revenue - Mizuho

Mizuho Securities maintained its price target on Apple (NASDAQ: AAPL) at $175.00 while maintaining a Neutral rating, ahead of the company's 2018 fiscal second quarter earnings announcement on May 1st, after the market close.

Analyst Abhey Lamba offers earnings estimates on AAPL suggesting fiscal second quarter guidance appears "doable" while acknowledging risk to fiscal third quarter revenue outlook, citing checks that "continue to point to iPhone X demand softness, while the upside from capital returns seems priced in. The analyst notes FQ2 EPS expectations of $2.65-$2.75 versus $2.71 and FQ2 revenue estimates of $60-61 billion versus guidance of $60-62 billion for the quarter.

Checks continue to suggest iPhone X softness. They anticipate iPhone units of 52.5-53.5mm (up 3-5% Y/Y) vs. consensus of 54mm. Along with ASPs of ~$745-755 (up 14-15% Y/Y), they think iPhone revenues could print around $39-40bn vs. consensus of $40bn.

"We think F3Q revenue guidance could miss at the midpoint and that upside to capital return plans is seemingly already priced in," Lamba commented on Q3.

For Q3, they expect total revenue guidance of $50.5-52.5bn (up 11-16% Y/Y) vs. consensus of $52bn. They assume iPhone shipments of 42-43mm (up 2-5% Y/Y) versus the consensus of 44mm (ASPs of $705-715 vs. consensus of $697).

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