Apple, Inc. (NASDAQ:AAPL) shares, which have come off from their all-time highs reached at the start of the year, could have an impending catalyst in the form of its earnings report.
The Apple Analyst: KeyBanc Capital Markets analyst Brandon Nispel reiterated an Overweight rating and $191 price target on Apple shares.
The Apple Thesis: Apple is tracking ahead of consensus hardware expectations for its December quarter, Nispel said, citing KeyBanc's proprietary Key First-Look Data, or KFLD.
The analyst clarified that KFLD consists of spending data from over 1.8 million unique KeyBank credit card and debit card customers in the U.S. but not international figures. The indexed spending for the fourth quarter, based on KFLD, showed 18% sequential growth in the fourth quarter, stronger than the previous three-year average of 13%, the analyst noted.
"For the quarter, the data tells us we should expect slightly better than historical growth for Hardware in the upcoming quarter," Nispel wrote in the note.
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Historically, Apple's December quarter hardware revenues have risen 62% sequentially over the last three quarters, the analyst said. The consensus for the December quarter of 2021, however, models only 53% growth, he added.
While the consensus expects a below-typical seasonal growth quarter due to the difficult comps, KeyBanc's data shows growth will be slightly above typical seasonal numbers, the analyst noted. This has increased confidence that despite supply constraints, Apple's U.S. hardware growth should remain strong, the analyst said.
Internationally, the analyst sees strong catalysts for increased Apple adoption due to extremely low penetration, increasing affluence in consumers and 5G upgrades.
Apple Price Action: Apple shares were trading at 170.69 on Monday morning, down 0.95%.
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Photo: Courtesy of Jim Maurer on Flickr
