Analysts Weigh In: Apple's Pending Products Will Drive Profits Or Cut Margins

Apple's AAPL ho-hum third-quarter results have left analysts debating how much product launches expected later this year will drive financial performance.

BTG's Walter Piecyk said management's fourth-quarter guidance for revenue and gross margin "didn't seem to imply any big product launches" until the end of September at the earliest. But he noted that research and development spending is at a pace not seen since 2006.

"It's a good indicator that Apple is working diligently on something new," Piecyk said

But Wells Fargo's Maynard Um worries about what he called the market's "increasingly lofty expectations" for Apple, noting that iPhone unit sales stagnated in the recent quarter.

Um is also uneasy about the likelihood that Apple's surprisingly high 39 percent gross margin will narrow and pressure earnings, while he suspects a shifting power balance toward wireless operators and away from device makers like Apple.

Um rates Apple at Market Perform.

UBS' Steven Milunovich called Apple "still a growth company, for now." Earnings could grow 20 percent on the introduction of the iWatch and the large-screen iPhone 6, as well as a continued 38 percent gross margin.

Milunovich rates the shares a Buy with a $115 target.

Apple's unexpectedly wide margin is "the highlight" of the recent period, according to Morgan Stanley's Katy L. Huberty. She noted lower component and warranty expenses are likely sustainable, while going forward relatively high-margin products like the iPhone and iWatch will constitute Apple's fastest-growing segments.

Huberty thinks Apple's current share price doesn't include the value of upcoming innovations in products and services. She rates the stock Overweight with a $110 price target.

Credit Suisse's Kulbinder Garcha thinks the the new and significantly larger phones will be more costly to manufacture and hurt gross margin.

While new products will drive growth, "we question the upside from current levels," Garcha said in a note maintaining a Neutral rating and $96 target.

Apple recently traded at $97.65, up 3.09 percent.