Apple stock: KeyBanc sees more downside risk despite 'less bad than feared' earnings setup

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By Senad Karaahmetovic

KeyBanc analysts reiterated an Overweight rating and a $177 per share price target on Apple (NASDAQ:AAPL) stock as the company prepares to brief investors on its FQ1 performance later this month.

KeyBanc’s data shows iPhone sales at carrier stores rebounded last month, which could suggest that supply is improving. Still, carriers are experiencing a “widespread” shortage of high-end iPhone Pro models, analysts added.

The analysts remain below consensus for FQ1 Hardware revenue, mostly due to iPad and Mac. KeyBanc’s estimates are below the Street on revenue and EBITDA by 4% and 3.2%, respectively.

“Consensus expects a lower growth quarter than AAPL's historical average. Consensus Hardware revenue estimates have come down (iPhone revenue/units are -5%/6%, respectively, since the end of Oct.) in response to the impacts to supply and demand for iPhone, though we believe there is still room for further downside risk, and we would expect buy-side expectations to be conservative,” they wrote in a note.

Net-net, KeyBanc sees “less bad than feared” setup for Apple stock into earnings as investors are likely to look beyond near-term challenges.

Apple stock price closed at $130.73 yesterday, implying a 35% upside potential based on KeyBanc’s price target.