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Apple’s profits are there and Wall Street isn’t feeling so happy

Nature

How is the iPhone 15 doing in a turbulent economic environment? Investors are about to find out.

AAPL from Apple Inc.,
+1.87%
September quarter results, due Thursday afternoon, are expected to offer a first glimpse of the iPhone 15’s performance, as the period included just over a week of sales of the electronics giant’s new lineup. audience. Management’s comments on the earnings conference call will tell even more of the story.

Analysts aren’t so optimistic heading into the report.

“Despite slight outperformance over the past month, we remain tactically leaning
cautious on earnings Thursday,” Morgan Stanley Erik Woodring wrote in a note to clients earlier this week ahead of the fourth-quarter fiscal report.

Woodring is concerned about “uneven consumer spending” and supply constraints, two factors that could lead Apple to imply a lower-than-consensus revenue range for the holiday quarter and what is normally seen at this time of year. ‘year.

See also: Apple faces ‘worrying’ pattern as earnings approach, analyst warns

The company also faces concerns over its China business, with Piper Sandler analyst Harsh Kumar pointing to tough comparisons in the region as well as increased local competition and sluggish macroeconomic conditions.

“Overall, while India will provide some recourse against declining sales in China, we do not believe this will be enough to offset global and Chinese weakness,” Kumar wrote, while lowering his overall estimate of December quarter revenue at $120.9 billion, below $123.1 billion. billion dollars by FactSet consensus.

As it stands, analysts expect Apple to take an unceremonious milestone in the September quarter, as consensus projections call for a fourth straight quarter of revenue declines, at $89.3 billion. of dollars. This would be the first time since 2001 that Apple saw its sales fall year over year for four consecutive quarters.

Even Kumar’s below-consensus estimate for the December quarter implies the company would end its streak during the holidays, as Apple reported $117.2 billion in revenue a year ago.

Evercore ISI’s Amit Daryanani sees September quarter consensus revenue target as achievable for Apple, although he says “the bar is a little higher” when looking at the quarter of December, as estimates imply growth of 5.5%.

“Nevertheless, we believe this should be achievable given the weak (comparisons), strong services and modest increase in iPhone ASP,” he wrote, referring to average selling prices . Apple has eliminated the cheapest storage configuration for its iPhone 15 Pro Max device, increasing the starting price of that model, which will likely benefit pricing trends.

Read: Is Apple’s iPhone 15 pricing strategy a risky bet or adapted to this economy?

While iPhones reign supreme, analysts will also be watching the iPad and Mac dynamic, which won’t necessarily be pretty.

“Macs and iPads will likely continue to see significant declines, but this appears to be correctly accounted for in the numbers, with consensus down 15-25%,” Daryanani wrote.

FactSet respondents expect $6.2 billion in iPad revenue for the September quarter, up from $7.2 billion a year ago, as well as $8.5 billion in Mac revenue , below the $11.5 billion the company announced a year earlier.

Apple shares are down 11% over the past three months, according to the Dow Jones Industrial Average DJIA.,
which counts Apple as a component, lost about 7%.

Nature

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