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Expectations for Apple’s earnings are still higher.
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goes to its financial results in December with its share at an everyday high. Expectations on Wall Street gradually rose, with particularly high hopes for iPhone sales after the company launched its first 12-series in the middle of the quarter.
The street is also hoping for MacBook sales, driven by the debut of the first laptops powered by Apple-designed processors, and a continuing headwind of the pandemic-driven work-from-home trend. Set expectations for continued strong demand for iPads, laptops and services, and you have the recipe for a strong quarter.
The only question is whether the expectations went too far.
Apple (ticker: AAPL) did not provide guidance for the quarter, which adds an element of volatility to this report. Street Consensus calls for revenue of $ 102.8 billion and earnings of $ 1.40 per share. For the seasonally softer March quarter, the street sees $ 78.9 billion in revenue and earnings of 90 cents per share.
Street consensus estimates followed by FactSet call for iPhone revenue to rise 6.4% to $ 59.6 billion, with double-digit growth in all other categories. The consensus has iPads sales at $ 7.4 billion, up 23.4%; Mac sales of $ 8.6 billion, up 20.4%; portable sales of $ 11.5 billion, an increase of 14.8%; and services revenue of $ 15.2 billion, up 19.3%.
Investors would also like to see if the company resumes leadership on earnings.
Cowen analyst Krish Sankar reiterated his Outperform rating on Apple on Friday, raising his price target to $ 153, from $ 133. Sankar expects the company to beat expectations for the quarter on both the top and bottom lines, especially powered by the strong iPhone demand. He plans $ 104.5 billion in revenue and a profit of $ 1.46 per share. According to the analyst, Apple sold 77 million iPhones in the quarter, up 97% in a row and 7% higher than in the year. He sees iPhone revenue at $ 60.1 billion, 7% higher than a year ago, with service revenue rising 26% to $ 16 billion. Apple remains Sankar’s best choice in the IT hardware sector.
Morgan Stanley analyst Katy Huberty last week reiterated her overweight rating on Apple shares and raised her price target to $ 152 from $ 144. She writes that her checks reveal that Apple sees strength in its quarterly product and service portfolio, driven by 5G iPhone adoption, the work-and-learn-from-home trend and continued commitment to the App Store.
“We are buyers above what we expect to be a record print in December,” Huberty wrote in a research note. ‘Our recent talks suggest that investors expect Apple to deliver good, but not good, quarterly results in December. We disagree and believe that Apple is likely to report a record quarterly revenue and earnings. ”
Huberty expects the double-digit increase in revenue in all revenue segments, with ‘risks moving upside down’ for iPhones, Macs and Services. Her estimate for revenue for the quarter is $ 108.2 billion, well above the $ 102.6 billion consensus. She sees earnings for the December quarter of $ 1.50 per share, above the street of $ 1.40.
Huberty believes the iPhone 12 was Apple’s most successful launch of the past five years. She predicts 78 million iPhones shipped in the quarter at an average selling price of $ 825, generating revenue growth of 14% to $ 63.9 billion – twice the growth rate currently predicted by the Street Consensus for iPhone revenue .
Loop Capital analyst Ananda Baruah recently reiterated its Buy rating and raised its target price to $ 155 from $ 131. Baruah writes in a research note that he expects a ‘very big year’ for Apple and he thinks the signs should be clear with the upcoming earnings report. Baruah believes that in the short term and during the calendar 2021, there may be material increases in street numbers, driven by power in both iPhones and Macs. Baruah also believes that the company can benefit greatly from the healthy growth in iPad, AirPod, Watch and Services.
Evercore ISI analyst Amit Daryanani recently reiterated his Outperform rating on Apple shares while raising his price target on the stock from $ 135 to $ 145. Daryanani pointed to a combination of better-than-expected unit demand and higher-than-expected average selling prices, as consumer demand tends toward the higher Pro and Pro Max versions of the new phone line. He also noted ‘better service growth’, given the growth in downloads of the App Store by more than 30%.
Apple shares closed Monday at a record high of $ 142.92. After rising by 82% last year, the share so far in 2021 is almost 8%.
Write to Eric J. Savitz by [email protected]