Stifel Nicolaus analyst Doug Reid this morning cautioned that while Apple‘s (AAPL) June quarter results tomorrow could show upside at the top line, an EPS beat is less likely as “gross margin headwinds take hold.”
Reid thinks gross margins are tracking below Street estimates. “Based on evidence of ongoing component shortages and ASP erosion,” he sees gross margin for the quarter of 38.8%, below the Street at 39.5%. “We expect even a slight disappointment in gross margin to dominate over impressive revenue trends to create near-term pressure on AAPL shares,” he adds.
On the other hand, he also says that strong Mac sales could trigger higher FY 2010 and 2011 revenue estimates after the print.
Reid repeats his Buy rating on the stock, but adds that there should be more attractive entry points for the stock after earnings as investor “recalibrate downward” on gross margins.
AAPL today is down $7.05, or 2.8%, to $242.85.
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