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- Apple is scheduled to release first-quarter results after the closing bell on Thursday.
- Investors will be watching for commentary on the company’s iPhone sales, growth in its services division, and the launch of Vision Pro.
- Here’s what Wall Street expects to hear from Apple on Thursday.
Apple is scheduled to report first-quarter results after the market closes on Thursday, and investors will be looking for solid results and strong commentary to justify the company’s more than 10% rally since the end of October.
Commentary on iPhone sales in China, the growth of its high-margin services business, and this week’s launch of the Vision Pro will be top concerns for Wall Street analysts on Apple’s earnings call.
Here are the quarterly numbers Wall Street expects, according to Bloomberg data:
- Revenue: $117.97 billion
- Earnings per share: $2.11
- Gross profit margin: 45.46%
Apple’s fiscal first quarter is its strongest in history, as it encapsulates the holiday shopping season, meaning the results could be an indicator of consumer health. . Apple is expected to return to higher revenue this year after a slump in iPhone sales in 2023, and analysts will be scrutinizing its guidance carefully.
Here’s what Wall Street analysts are saying about Amazon’s upcoming earnings report.
Goldman Sachs: “Preparing for accelerated growth in the second half of 2024”
According to a recent note from Goldman Sachs, Apple should release “in-line” results on Thursday, with much of the discussion on Wall Street shifting to guidance, ongoing regulatory issues, and the strength of the App Store. It is said that there is.
The bank expects Apple to report earnings of $2.10 per share, revenue of $117.4 billion and gross margin of 45.0%, and expects iPhone sales to increase 3% year over year thanks to the iPhone 15 lineup. are doing. However, revenue growth should slow in other product lines.
“Double-digit revenue declines are expected in iPad (down 22% year-over-year) and Wearables, Home and Accessories (down 14%), due to a challenging performance in the prior year period that benefited from new product launches,” Goldman Sachs said. said.
Meanwhile, the bank expects Apple’s services revenue to rise 11% due to recent price hikes and increased App Store sales.
“We expect services revenue to benefit from increased adoption of all services, particularly iCloud+, as data consumption growth outpaces device storage and AppleCare+. Because the mix of sales (and opportunities to sell AppleCare+ directly) is increasing,” Goldman said. Said.
Goldman Sachs rates Apple a “buy” with a price target of $223.
JP Morgan: “Margin may move stock prices”
According to a recent note from JPMorgan, earnings results should have a bigger impact on Apple’s stock price than sales.
“iPhone premiumization through price mix tailwinds and tight cost controls is helping hardware margins, with mix changes to services further contributing to margin improvement, outlined in Q1 2024. “We may revise our 45%-46% gross margin guidance upwards,” JPMorgan said, “particularly when we keep volume leverage in mind.”
The bank said investors should have largely allayed concerns about weak iPhone sales, encouraged by recent data such as Apple overtaking Samsung to become the global market leader in smartphone shipments.
JP Morgan said, “Following strong sales in the first quarter of 2024, investors’ current expectations are shifting to a gradual trend driven by strong iPhone sales; “There was also a decline in iPhone prices heading into the second quarter.”
JP Morgan rates Apple “overweight” and has a price target of $225.
Wedbush: “Another prove-me moment for Cook and Cupertino.”
Wedbush analyst Dan Ives said Apple will likely beat first-quarter revenue and profit estimates on Thursday, despite growing investor concerns about iPhone sales. Stated.
“The biggest focus on the Street will obviously be double-digit growth in iPhone and services revenue, but with iPhone revenue at a bogey of $68 billion and services forecast at $23 billion, we expect a relatively “We think it’s been a good run,” Ives said. he said in a memo Wednesday.
iPhone sales in China, which account for about 20% of the company’s total iPhone sales, will likely attract a lot of attention when it announces its financial results as competition with Huawei intensifies, but Ives said sales trends are stable. It is said that they are doing so.
“So far, iPhone demand in China has been stable, with some relatively strong parts at the high end, mainly around upgrade opportunities, but some isolated weaknesses in third-party retail channels. We estimate that up to 100 million iPhones are in China for upgrade opportunities,” Ives said. “China is a tailwind that offsets some of Huawei’s competitive pressures in mainland China.” Ta.
Wedbush rates Apple an “outperform” with a price target of $250.
Bloomberg Intelligence: “iPhone sales in China likely signal pressure”
Apple’s iPhone sales in China have faced several headwinds in recent months as China’s economic weakness has become more apparent, which could impact Apple’s first quarter results. be.
“Apple’s first-quarter results show iPhone sales pressure in Greater China due to increased competition from Huawei and declining consumer spending,” Bloomberg Intelligence analyst Anurag Rana said in a recent note. There is a high possibility that it will happen.”
Rana also wrote that investors will be keen to hear about the progress of Vision Pro’s launch, in addition to commentary on potential regulatory changes to the App Store. Lana estimates that Apple could generate $1.5 billion in Vision Pro sales this year.
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