Even a pandemic can’t stop Apple Inc. from hitting new records.
The smartphone giant is set to make its first-ever quarter with more than $ 100 billion in revenue on Wednesday, led by strong early performance for its new iPhone 12 line as well as demand ongoing for Macs and iPads for remote work and school needs.
Apple’s AAPL,
first-quarter fiscal results are the first to include sales from the iPhone 12 family of devices, which began rolling out in October. While Apple was facing supply constraints on some models, Apple’s first 5G-capable phones appear to be the company’s most successful product in five years, according to analyst Morgan Stanley, Katy Huberty.
Consumers are increasingly opting for higher-priced iPhone models and more expensive storage configurations, which would increase the average selling price of devices and help the company’s profit margin. Apple no longer provides unit sales metrics that shed light on its average retail prices, but the company usually offers some qualitative insights about the devices best performance.
Apple has also seen strong sales of Macs and iPads amid the pandemic, with more people working and studying from home, and that trend is expected to continue into the first fiscal quarter. The company launched new iPads late last year in addition to their first computers to feature the company’s own custom chip.
Analysts expect higher performance for the company’s services division as well, though one area may not stand up as well. Apple has done a good job of moving sales to its online store with the COVID-19 crisis, but it is “heavily reliant on internal buyers” to drive sales of its AppleCare insurance product instructions, wrote Huberty.
What to expect
Earnings: Analysts called FactSet are monitoring that Apple earned $ 1.41 a share in the December quarter, up from $ 1.25 a year earlier. On Estimate, which crowdsources estimate from hedge funds, academics and others, the average forecast calls for a share of $ 1.45.
Income: The FactSet consortium models a record $ 102.54 billion in revenue for Apple’s first fiscal quarter, up from $ 91.82 billion a year earlier. The Measurement consensus is for $ 103.76 billion.
Analysts surveyed FactSet model $ 59.58 billion in iPhone revenue for Apple, up from $ 55.96 billion a year earlier. Apple declined to issue formal guidance for the last call for employment, but Chief Financial Officer Luca Maestri said at the time he expected growth in iPhone revenue even if it started Machines carry later in the quarter than they did a year earlier.
The FactSet consortium calls for $ 7.38 billion in Pad 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 sector, up from $ 10.01 billion.
Stock transfer: Apple shares have won after three of the last five earnings reports, and shares are up 72% over the past year as the Dow Jones industrial average DJIA,
which counts Apple as part, has gained 7%.
Of the 41 analysts surveyed by FactSet that cover Apple stock, 28 have a buy rating, 10 have a rating and three have sales, with an average price target of $ 132.71.
What else do you look
Apple has refused to provide a quantitative financial forecast in each of its last three earnings reports due to uncertainty related to the COVID-19 pandemic, and this trend is likely to continue. forward in this quarter.
“Given the uncertainty, we expect Apple to be more likely to issue‘ instructions ’rather than‘ instructions ’for Q2,” Bernstein analyst Toni Sacconaghi wrote in a note to clients. In addition to the many unknowns surrounding the pandemic, Apple ‘s late launch of the latest batch of iPhones means that the March quarter could be stronger than usual, with iPhone 12 had fewer “sales days” going up.
Sacconaghi will also be on the lookout for a report on Apple’s ongoing controversy with app developers led by Epic Games, who sued Apple and said the company’s App Store rules regarding in-app purchases are monopolistic . Apple has reduced commission rates for smaller developers that make up the majority of those on the App Store, even as those developers don’t add too much to Apple’s overall revenue. from the stage.
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“We believe Apple’s decision to reduce commissions was very political, allowing the company to represent itself as a small business promoter, while also genuinely addressing the complaint. their high app store fees hinder competition and innovation, ”wrote Sacconaghi, which has a market performance level and a $ 120 price target on the stock. “It remains to be seen whether Apple will give further consideration to this issue; That said, we still believe the legal risk to App Store revenue is low. ”
Morgan Stanley at Huberty is interested in the company’s move to China. She suspects the company is taking advantage of Huawei’s weakness, citing data showing that customers are switching from Huawei to Apple devices at its highest level in 15 months. It has a fat level and a $ 152 price target on the stock.
Goldman Sachs analyst Rod Hall made the point about Huawei’s challenges, although he is concerned that “Apple has already started cutting iPhone orders” and that building orders for the first half of 2021 suggest move towards models with lower average selling prices.
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“These changes are consistent, in our opinion, with the normal iPhone redesign cycle but are not supercycle compatible,” he wrote. “As a result we expect iPhone replacement rates to begin their continued decline in 2021.” Hall has a sell-off rate and a $ 85 target price on Apple shares.
Monness, Crespi, Hardt & Co. analyst Brian White highlights a number of new products and services that Apple could shed light on during the quarterly call. In the December quarter, the company began selling its AirPods Max over-the-ear headphones and launched both a membership fitness offer and a way to package service together for a discount.
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“In our opinion, Apple’s package was positioned better than ever in the recent holiday season, while product and service updates positioned Apple’s Planet well in 2021, ”he wrote. White has a buy rate and a $ 144 price target on Apple shares.