Apple Set for a Massive Post-Earnings Rally

The stock of Apple Inc. (NSDQ: AAPL) stock is trading higher by 30 percent since its May lows. Market analysts continue to be bullish on the AAPL stock, as reflected by the stream of upgrades and bullish notes from market experts.

Deutsche Bank and Stifel analysts raised their iPhone sales forecasts into the third quarter earnings report. Separately, Apple analyst Ming Chi Kuo upped his estimates for iPhone 7 sales pointing to the Samsung Galaxy Note 7 issue. Now, the question is: Should market participants buy into the increasing optimism about the AAPL stock, especially with the significant surge that the stock experienced during the recent months?

Mr. Aaron Rakers, an analyst at Stifel, increased his target price on the Cupertino, California-based tech giant’s stock to $130. The analyst’s previous price target stood at $120. Aside from that, Mr. Rakers also upped his iPhone sales forecasts, as well as revenue and earnings per share estimates for the next two quarters.

According to the Stifel analyst, “We are increasing our F4Q16 revenue and EPS estimates from $45.6B/$1.57 to $47.7B/$1.69 (street: $46.9B/$1.66), which now reflects iPhone shipments of 47.0 million vs. our prior 42.2 million estimate (street: 44.6M; 40.0-46.2M range) […] We adjust our F1Q17 (Dec ’16) estimates from $70.5B/$3.01 to $74.3B/$3.17 (street: $74.4B/$3.19) with iPhone shipments now estimated at 76.6M vs. our previously noted conservative estimate of 69.9 million (street: 75.4B).”

These new forecasts indicate additional iPhone sales of 4.6 million during the September quarter and 6.7 million in the December quarter. At an average selling price of $655, the incremental sales could be equivalent to additional revenue of $3.01 billion for the September quarter and $4.39 billion for the December quarter.

The Stifel analyst was not the only one who upgraded his iPhone sales projections. Deutsche Bank’s Sherri Scribner also increased her price target from $105 to $108. The Deutsche Bank analyst also raised here iPhone sales forecast to 46 million for the September quarter and 75 million for the December quarter.

Revenues from the iPhone are responsible for more than 60 percent of the total revenue of Apple over the last four quarters. With this, the strong sales of the device could be setting the tech titan up for a huge beat during the upcoming earnings report. Ultimately, this could also push the AAPL stock much higher.

Knowing this, market participants who are looking for a short-term upside should go long with the iPhone maker’s stock ahead of the upcoming earnings report in order to take advantage of the post-earnings rally.

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