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Apple up 3.7% as markets rally, analysts defend

Aug. 10, 2015 3:01 PM ETApple Inc. (AAPL) StockAAPL, CRUSBy: Eric Jhonsa, SA News Editor63 Comments
  • The Nasdaq is up 1.2%, and Apple (NASDAQ:AAPL) is doing more than its fair share. 44.5M shares have been traded thus far vs. a 3-month daily average of 46.9M.
  • Bernstein, Oppenheimer, and Nomura have issued bullish notes today. Berntein's Toni Sacconaghi argues iPhone sales can still rise in 2016 in spite of the tough comps produced by a strong iPhone 6/6+ upgrade cycle: He argues further high-end smartphone share gains are possible, notes first-time iPhone buyers still account for ~35% of sales, and observes many U.S. buyers are no longer beholden to 2-year contracts. Chinese income growth and an iPhone 6/6+ price cut (following the 6S launch) are also seen as catalysts.
  • Oppenheimer's Andrew Uerkwitz also cites Chinese growth and high-end share gains as potential catalysts - he thinks the Chinese iPhone base will surpass the U.S. base in 2015 - and argues Apple's service revenue growth is underappreciated. He adds chip suppliers with strong Apple exposure are outperforming peers amid an industry downturn.
  • Nomura's Jeffrey Kvaal: "Fears of broad order cancellations in Apple’s supply chain driven by soft China demand appear exaggerated to us. Our Taiwan Technology team, led by Anne Lee, notes that some suppliers, such as Catcher, have not seen cancellations over the past month. Bottlenecks may defer demand slightly for some vendors, but stable orders and an on-track 6S launch suggest fears will be short lived ... We believe the 6S will enter a subscriber base no more penetrated with the 6 than a typical launch – likely the low end of our 35-40% range."
  • Apple is now up 7% from a Wednesday low of $112.10, but still down 8% from where it traded going into its July 21 FQ3 report. Cirrus Logic (CRUS +4%), which received 62% of its calendar Q2 revenue from Apple, is also outperforming.

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