Why This Apple Analyst Expects Clear Upside To Q4 Street Numbers Across The Board

Apple, Inc. AAPL shares have picked up some momentum heading into Cupertino's fourth-quarter earnings release, due Oct. 28 after the market close.

The Apple Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating on Apple with a $185 price target.

The Apple Thesis: Apple will deliver clear upside to Street consensus across the board, buoyed by robust iPhone 13 demand globally and in particular in China, Ives said in the note.

The Street is modeling revenues of $84.8 billion and earnings per share of $1.23, the analyst said. 

A $1-billion-plus beat is likely, driven by the iPhone 13 launch, he said.

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The global chip shortage could lead Apple to trim its iPhone production by 5 million to 10 million units, Ives said.

This will likely render the December quarter guidance mixed, the analyst said. The softness, he said, remains purely a timing issue that is well understood by the Street.

Apple will be running into a 5-million- plus, iPhone 13 unit shortage for the holiday season if consumer demand keeps up at this pace, Ives said.

"With ASPs continuing to be very positive on Pro/ Pro Max and as of today roughly 250 million of 975 million iPhones worldwide not upgrading in 3.5 years, we view near-term supply chain issues as nothing more than a speed bump on a multi-year supercycle iPhone 12/13 that continues to play out with FY22 Street numbers looking conservative at this juncture," the analyst said. 

Ives reiterated his view that his favorite large cap tech name to play the 5G transformational cycle is Apple, with the one-two punch of its massive services business and iPhone product cycle.

This will translate into a $3-trillion market cap for Cupertino during 2022, the analyst said.

AAPL Price Action: Apple shares gained 0.34% Wednesday, closing at $149.26.

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Apple CEO Tim Cook. Courtesy photo.