Analyst: Estimates For Apple's Q4, FY17 'Remain Too High'

Baird Equity Research's analyst William Power raised some concern over Apple Inc. AAPL's stock and outlook in a research note on Wednesday.

According to Power, consensus estimates for Apple's fourth quarter and full fiscal year 2017 are too high. The analyst cited additional currency headwinds and a worsening sentiment surrounding the business.

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Power did, however, note that Apple's third quarter print (scheduled for July 26 after market close) is "likely ok," and the company will earn $1.37 per share on revenue of $42.0 billion — a figure that is within the company's own guidance and slightly below consensus estimates.

Beyond Q3

Looking past the upcoming third quarter is where the real issues lie, the analyst cautioned. Consensus estimates are calling for a sequential revenue growth from the third quarter to the fourth quarter, notably above Power's 3 percent estimate.

Power isn't particularly optimistic over an iPhone 7 launch this year, the timing of which is unknown. He added that, while an estimated 60 percent of iPhone users are using a device that is at least two years old, many will wait for a "potentially more revolutionary" iPhone 8 device before upgrading.

Bottom line, Power suggested there is "more downside than upside to current estimates" and investors should "remain cautious" in the near term. However, the analyst remains positive on Apple over the longer term given its competitive position and strong cash flow.

Shares remain Outperform rated with an unchanged $115 price target.

Full ratings data available on Benzinga Pro.

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