RBC, Bank Of America Surveys Paint Bullish Picture Ahead Of Apple's Q4 Print

Apple Inc. AAPL is scheduled to report its fiscal fourth quarter and full-year results Thursday, Nov. 1 at a time when investor sentiment is "largely neutral to even slightly negative," according to RBC Capital Markets. 

The Analyst

RBC analyst Amit Daryanani maintained an Outperform rating on Apple with an unchanged $250 price target.

Bank of America Merrill Lynch analyst Wamsi Mohan maintained a Buy rating with a $256 price objective. 

The Thesis

Apple investors aren't overly bullish heading into earnings season, but the iPhone maker is likely to report a better-than-expected print in early November, Daryanani said in a note. (See the analyst's track record here.)

The new iPhone launch should generate a higher average selling price, which — along with lower memory prices — will generate a margin lift, Daryanani said. Products within Apple's "Other" category like the Watch and AirPods could surprise to the upside, and the Services business will likely show continued momentum, he said. 

RBC's survey of more than 5,000 users supports high expectations for Apple, Daryanani said. The results showed the following:

• Purchase intention rates for iPhones rose from 20 percent last year to 26 percent,
• The higher-priced iPhone XS Max and XS are preferred by 25 percent and 20 percent of respondents, respectively.
• Among those who want to buy the XS or XS Max, 68 percent of users want to buy the higher-tier memory models.
• Apple Watch attach rates nearly doubled from last year to 26 percent.

BofA's Survey Similarly Bullish 

BofA oversaw a survey of 91,000 global smartphone users across the United States, United Kingdom, India and China. The findings suggest Apple is still taking advantage of high customer loyalty, which bodes well for its growth prospects, analyst Wamsi Mohan said in a research report. Here is a summary of some of the key findings:

• Seventy percent of existing iPhone owners plan on sticking with an Apple product in their next upgrade.
• Thirty three percent of all survey respondents plan on buying an iPhone versus second-ranked Samsung at 15 percent.
• Apple users in China were more likely to own an iPhone 6, which implies a larger potential opportunity for future upgrades.
• Apple Music accounted for 12 percent of services engagement, which similarly implies a potential for material growth.
• Among emerging market users, 47 percent of existing iPhone owners owned a non-iPhone within the past two years.
• More than 10 percent of all users said they own at least four Apple-branded products.

Price Action

Apple shares were up 1.27 percent at $226.62 at the time of publication Tuesday. 

Related Links:

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Loup Ventures Surveys iPhone Demand, Finds Strength In Plus-Sized Model

Photo courtesy of Apple.