Tech

A miss is already 'baked in' for Apple: Analyst

iPhone franchise still intact: Analyst
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iPhone franchise still intact: Analyst
Apple still has potential for upside surprise: Expert
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Apple still has potential for upside surprise: Expert
Low expectations for Apple's quarter
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Low expectations for Apple's quarter

Shares of Apple ticked higher Tuesday ahead of a quarterly earnings report expected to reveal if holiday iPhone sales were up to snuff.

But one analyst said even if iPhone sales disappoint year over year until the March quarter, good times might be ahead for the technology stock.

"The mistake we end up making is we end up taking one or two quarters' data points and extrapolating them to eternity," said Abhey Lamba, senior technology analyst at Mizuho Securities.

He told CNBC's "Squawk Alley" on Tuesday that he recently upgraded the stock, and expects shares of Apple to bottom between June and the end of the calendar year.

"When you take a step back and look at the bigger picture, the [iPhone] franchise is still intact," Lamba said.

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Indeed, Amit Daryanani, analyst at RBC Capital Markets, said he expects iPhone units to continue grow when looking three to five years in the future. He contends that after 24 months with an iPhone 6, the mass of users from that "supercycle" will be looking to upgrade — just in time for the iPhone 7.

"I hear the concerns that everyone else has on the iPhones having peaked," Daryanani said Tuesday on CNBC's "Power Lunch." "Here's a fundamental belief: iPhone 6 was a super cycle. We're having a bit of a hangover in '16 with the 6S."

But Timothy Arcuri, analyst at Cowen Group, told "Power Lunch" on Tuesday that while the iPhone 7 might help Apple, economic uncertainty in China is still weighing on the stock, where the company has a quickly growing customer base and a large production workforce.

"If you look at China, Apple has 75 percent of the premium smartphone market now in China," Arcuri said. "And that market is not going to grow that much over the next couple of years. … I'm not saying Apple won't grow, I'm just saying we're in a period of transition, and we're going to have to have the next big thing. "

But while Chinese stock markets have suffered routs over the past year, most Chinese consumers are seeing higher incomes and are confident, according to research by Paul Hickey, co-founder of Bespoke Investment Group, an independent research firm.


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"In our surveys, which we've been running for several quarters, the percentage of people who plan to buy an iPhone as their next smartphone was over 50 percent for the first time since we've been running this survey," Hickey told CNBC's "Closing Bell" on Tuesday. "So in that respect, the consumers are still very positive on the iPhone. Where the iPhone lacks is in affordability. But in quality and status symbol, it's far and away the leader."

Still, with iPhone sales still driving quarterly results more than any other product, Apple faces a number of wild cards, to be sure, Lamba said. He'll be watching for the potential release of a smaller-screen iPhone this year, and for color on the new subscription upgrade program.

"At this point, a little bit of a miss is kind of baked in," Lamba said. Apple is slated to report earnings after the bell.