Even a pandemic cannot prevent Apple Inc. From achieving new records.
The smartphone giant is expected to record its first-ever quarter with more than $ 100 billion in revenue on Wednesday, driven by the strong early performance of its new iPhone 12 line as well as the continued demand for Macs and iPads to work remotely and the needs of the school.
The first quarter financial results will be the first to include sales of the iPhone 12 family. Which I started rolling out in October. Although Apple faced display restrictions on some models, the appearance of the first Apple phones with 5G technology was arguably Most successful product launch in five yearsIn the view of Morgan Stanley analyst Katie Huberty.
Consumers appear to be increasingly choosing the pricier iPhone models and storage configurations, which should boost the average selling price of devices and help the company’s profit margins. Apple no longer provides unit sales metrics that highlight average selling prices, but the company usually provides some qualitative feedback on top performing devices.
Apple has also seen strong sales of Macs and iPads amid the pandemic, with more people working and studying from home, and that momentum is expected to continue into the first quarter of the fiscal year. The company launched new iPads late last year as well The first computers to feature a dedicated chip for the company.
Analysts are forecasting record performance for the company’s service category as well, although one area may not hold up as well. Apple has done a good job moving sales to its online store due to the COVID-19 crisis, but it is “overly relying on in-store customer purchases” to drive sales of AppleCare’s insurance product, Huberty writes.
what are you expecting
earnings: Analysts tracked by FactSet expect Apple earned $ 1.41 a share in the December quarter, up from $ 1.25 the previous year. At Estimize, which relies on crowd-sourcing from hedge funds, academics, and others, the average projection requires $ 1.45 a share.
Revenues: FactSet consensus model of $ 102.54 billion in revenue for Apple’s first fiscal quarter, up from $ 91.82 billion the previous year. The estimate consensus is $ 103.76 billion.
Analysts through FactSet model tracked $ 59.58 billion in iPhone revenue to Apple, up from $ 55.96 billion the year before. Apple declined to provide official guidance for the quarter on its latest earnings call, but CFO Luca Maestre He said at the time that we should expect growth in iPhone revenue Although, the devices will start shipping later this quarter compared to the previous year.
FactSet consensus calls for $ 7.38 billion in Padm revenue, up from $ 5.98 billion; $ 8.63 billion in Mac revenue, up from $ 7.16 billion; $ 15.17 billion in services revenue, up from $ 12.72 billion; And $ 11.49 billion in revenue for the wearables, home and accessories category, up from $ 10.01 billion.
Stock movement: Apple shares gained after three of the past five earnings reports, and shares have risen 72% over the past year like the DJIA.
Which counts Apple as an ingredient, it gained 7%.
Of the 41 analysts FactSet tracks who cover Apple stocks, 28 have buy ratings, 10 have pending ratings and three have sell ratings, with an average target price of $ 132.71.
What else to watch
Apple declined to provide quantitative financial projections in each of its last three earnings reports due to the uncertainty related to the COVID-19 pandemic, and the trend is likely to continue this quarter.
Bernstein analyst Tony Sakonaghi wrote in a note to customers: “Given the ongoing uncertainty, we expect Apple likely to provide ‘guidance’ rather than ‘guidance’ for the second quarter.” In addition to the many unknowns about the pandemic, the timing of Apple’s late launch of the latest batch of iPhones means that the March quarter may be stronger than usual, given there have been fewer iPhone 12 “sale days” that preceded it.
Sacconaghi will also be watching to comment on Apple’s ongoing dispute with app developers led by Epic Games, which has filed a lawsuit against Apple and claimed that the company’s app store rules around in-app purchases are monopolistic. Apple lowered commission rates for the small developers who make up the bulk of the developers on the App Store, even if those developers don’t contribute much to Apple’s total revenue from the platform.
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“We believe Apple’s decision to cut commissions was politically smart, allowing the company to portray itself as a small business promoter, while addressing a superficial complaint that high app store fees stifle competition and innovation,” Sakonaghi wrote. Market performance and price target assessment of $ 120 a share. It remains to be seen whether Apple will provide further comments on this matter; However, we still believe that the legal risks on the App Store are low.
Morgan Stanley’s Huberty takes care of the company’s momentum in China. It suspects the company is taking advantage of the weakness at Huawei, citing data indicating that customers are switching from Huawei to Apple devices at the highest rate in 15 months. It has a weight gain rating and a $ 152 price target per share.
Goldman Sachs analyst Rod Hall echoed the point about Huawei’s challenges, although he worried “that Apple has already started cutting iPhone orders” and that order building for the first half of 2021 indicates a move towards models with average selling prices.
He wrote: “These changes are consistent, in our view, with a regular iPhone redesign cycle but not corresponding to a super cycle.” “As a result, we still expect iPhone replacement rates to resume their steady decline in 2021.” Lounge It has a selling rating and target price of $ 85 on Apple stocks.
Analyst Brian White, Monness, Crespi, and Hardt & Co. Spotlight on several new products and services that Apple could highlight during the quarterly call. During the December quarter, the company began selling over-ear AirPods Max and rolling out both a subscription fitness offering and a way to bundle service together for a discount.
“From our point of view, the Apple portfolio is doing better than ever as the latest holiday season approaches, while product and service updates are putting Planet Apple well into 2021,” he wrote. White has a buy rating and price target of $ 144 on Apple stock.
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