Rosenblatt Defends Apple, Says Guidance Concerns Are 'Overblown'

Should investors be worried about Apple Inc. AAPL's fiscal second-quarter guidance next week?

Some analysts — like BTIG's Walter Piecyk, say yes — while others are unconcerned.

The Analyst

Rosenblatt Securities' Jun Zhang maintained a Buy rating on Apple's stock with an unchanged $180 price target.

The Thesis

Apple could very well guide its fiscal second quarter (March) revenue below the current consensus estimate of $68 billion due to slowing iPhone sales, Zhang said in a research report. (See the analyst's track record here.)

This is not a bearish signal, since the company should be able to recognize a portion of the iPhone X units which were produced in December and iPhone SE2 shipments, "which could begin as early as March," the analyst said.

Apple could see upside from sales of the HomePod device, which becomes available Feb. 9, the analyst said, and continued strong demand for AirPods.

The launch of the new iPad Pro in June will be "supportive" to the June quarter results, Zhang said. Beyond sales metrics, Apple is believed to be in the process of cutting component costs, including panels, memory and glass casings, he said.

Bottom line, it is "difficult" to imagine a scenario in which Apple delivers signs of positive momentum in its guidance, but any concern related to the March quarter is "overblown" ahead of multiple catalysts, according to Rosenblatt.