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Goldman bullish on Apple iPhone 7 demand

VIDEO2:1902:19
Goldman bullish on Apple

Goldman Sachs reiterated its "conviction buy" rating on Apple on Tuesday, citing an expected earnings beat this quarter and high projected demand for the tech giant's next iPhone.

A survey Goldman conducted found that 44 percent of respondents plan to buy the new iPhone 7 when it is released during the fall.

"This implies a shortening of the replacement cycle, as a third of upgrades are expected to come from current generation (<1 year old) iPhones. In addition, it reflects a high number of iPhone 7 sales to switchers (near 25%) from other platforms such as Android, suggesting that Apple will continue to gain share," Goldman said in a note.

The newest model of Apple's flagship device is expected to be released later this year. Shares of Apple have gained about 4 percent this year, and closed up 1.3 percent Tuesday.

Goldman added it expects Apple to enter an upward estimate revision cycle.

"We expect a beat and raise quarter from Apple, with revenues of $54.4bn (vs. consensus at $52.0bn and guidance of $50-53bn) and EPS of $2.17 (vs. consensus at $2.00). Our above-consensus view is driven by iPhone units, which we model at 53.6mn vs. consensus at 50.0mn."

Apple reports quarterly results April 25 after the bell.

Apple in 2016

— CNBC's Michael Bloom contributed to this report.