A sharp increase in Apple Inc.’s off-balance-sheet manufacturing and purchase commitments to a record $37.6 billion in fiscal 2017, up 31% from a year ago, potentially indicate a strong ramp for iPhone X, according to RBC Capital analyst Amit Daryanani. After an analysis of Apple’s audited annual report filed with the Securities and Exchange Commission, Daryanani said the 8% decline in warranty accruals was “logical” given the iPhone X delay; a slight decline in operating margins in the U.S. reflect carrier discounts on new phones; and the 31% rise in vendor nonreceivables reflect component purchases by Apple for manufacturing licensee partners and overall inventory on Apple’s balance sheet. Daryanani reiterated his outperform rating and $190 stock-price target, citing “multiple tailwinds” for EPS growth, including higher average selling prices for iPhone X, improved gross margins and potential tax reform. The stock slipped 0.1% in premarket trade, which puts it on track for a fourth straight decline since it closed at a record $176.24 on Nov. 8. The stock has climbed 8.8% over the past three months, while the tech-heavy Nasdaq 100 has rallied 6.9% and the Dow Jones Industrial Average has gained 6.6%.
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