One of the most highly anticipated earnings reports of the season is slated for release after Tuesday's bell - Apple (AAPL). The world’s biggest company, by market cap, is on track to log its worst performance in six years. But since January, Apple is still beating the broader U.S. market, with S&P 500 up just about half a percent.
Investors are closely watching to see if Q3 results could bring back some excitement for the tech giant. Gene Munster, who covers the stock for Piper Jaffray, thinks Apple will deliver. “I think investors are going to be impressed by what they're going to indicate for the December quarter,” he said.
The Street is expecting both profit and sales to grow from a year ago. Analysts are forecasting $1.88 earnings per share, up from $1.42 a year ago and revenue to increase to $51 billion versus $42 billion a year ago.
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“It really comes down to is what the guidance is for December. If they guide at the high end of the range…that's going to be a sign that Apple's optimistic that the [iPhone] 'S' cycle is going to be better than what investors think,” said Munster.
Piper Jaffray has an “overweight” rating for Apple with a price target of $172 a share, that’s nearly 50% above where the stock is currently trading. Munster stands by his bullish call, highlighting upcoming products like the iPhone 7. As investors start to anticipate the next cycle, the analyst claimed, “it’s a critical part of owning the stock right now.”
As for the much talked about Apple car, Munster is a “believer that it’s real.” But he added “it's difficult, if not impossible, to predict the timing of it.” The stock analyst thinks it's possible an Apple car, “would add about $135 billion to Apple's overall revenue…it makes sense that Apple goes and tries to target that.”
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