Apple Remains A Top Pick Ahead Of Q4 Results, Brian White Bullish On iPhone Growth Benefits

Drexel Hamilton’s Brian White expects Apple Inc. AAPL to report its sales and EPS ahead of the estimates, when the company reports its Q4 2016 results on Tuesday.

White maintained a Buy rating on the company, with a price target of $185.

The analyst continues to view Apple as a Top Pick for the rest of 2016, given that the company’s “sales, profit and iPhone cycle have bottomed, while valuation remains depressed and we expect the iPhone 7 cycle will return the iPhone franchise to growth.”

Q4 Expectations

For Q4, White expects the company to report iPhone units of 44.05 million, representing an 8 percent year-on-year decline but 9 percent quarter-on-quarter growth, benefiting from the rapid iPhone roll-out over 29 geographies in the first round and the earlier availability of the iPhone 7, as compared to the iPhone 6s.

“Although we believe Apple will benefit from the iPhone 7 launch in China, we expect Greater China revenue to fall by 30-35 percent YoY in 4Q:FY16 and decline 18 percent in FY:16 given difficult comparisons after growing sales by 84 percent in FY:15,” the analyst stated.

2017 Expectations

White also believes that the iPhone cycle bottomed out in Q2 2016 and that the iPhone 7 and 7 Plus could bring back unit growth in Q2 2017.

“We anticipate iPhone unit growth to return in FY:17 and the we believe the iPhone 8 can drive another year of growth in FY:18,” the analyst added.