Apple's Q4 Has Upside, Field Triangulation Shows

• Apple Inc. (NASDAQ: AAPL) shares have risen 7.24 percent over the past five trading days, reaching a high of $119.122 on October 23.
• Cowen’s Timothy Arcuri has maintained a Market Perform rating on the company, while raising the price target from $130 to $135.
• Arcuri mentioned that recent demand work and field triangulation suggest that there could be upside to the CQ4 guidance, with potential for iPhone units as high as 78-80 million.

Analyst Timothy Arcuri expects Apple to report its FQ4 revenues marginally above the consensus, with in-line EPS.

With the simultaneous launch of the iPHone 6S and 6S+ in China favoring the potential for upside, Arcuri cautioned that the launches were one week later than the launches in 2014, leading to a shorter sales period for the new units.

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Apple is expected to report iPhone units of 50 million, with 9.5 million iPad units and about five million Apple Watch units. Gross margins are expected at 30 percent. Arcuri also believes that “the decision to keep entry level version at 16GB and builds which contain a greater portion of higher ASP 6S+ than the 6+ last year could be GM tailwinds.”

Recent survey data also suggests increased penetration growth for the iPhone, as well as “meaningful future loyalty at key U.S. operators.”

The revenue and EPS estimates for F1Q16 have been raised from $77.0 billion to $80.1 billion and from $3.17 to $3.34, respectively.