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One analyst says look past Apple earnings and look ahead to the iPhone 8 (AAPL)

One analyst told investors May 3 to forget about yesterdays results and instead look forward to the iPhone 8.

Apple CEO Tim Cook.

Shares of Apple are down roughly 1% to $145.93 as of 11:00 a.m. ET this morning after the company reported revenues and iPhone sales that missed analysts' estimates.

However, one analyst told investors on May 3 to forget about yesterday's results and instead look forward to the iPhone 8.

Credit Suisse analyst Kulbinder Garcha circulated a short note to clients to reiterate his "Outperform" rating and $170 target price on Apple stock. Garcha's twelve month price target implies 18% of potential upside.

Garcha wrote, "Apple reported an OK set of results this quarter, with revenues of $52.9bn (+4.6% yoy /-32.5% qoq) and EPS of $2.10 vs. consensus of $2.02. With the iPhone showing sustained growth, and Services again showing robust growth, we still look forward to an iPhone 8 super cycle."

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Garcha said that while this earnings report was just "OK" there were some bright spots including the App Store and Apple Services. The App Store grew by 40% and Apple services by 18%. "As such, we see material potential for Apple's Services with growth being driven by the App Store, an inflection in Apple Music revenues, and iCloud. All this supports our view that Services can grow from ~20% of GP in FY16 to 1/3 of GP LT," Garcha said.

Apple reported adjusted EPS of $2.10 and revenue of $52.9 billion, beating estimates for EPS of $2.02 but missing estimates on revenue of $53.1 billion.

Apple shipped 50.8 million iPhones, 0.6 million less than expected. However, Garcha expected iPhone sales to fall off as consumers eagerly wait to upgrade to the iPhone 8 in Fall 2017.

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