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Expectations for Apple’s earnings have steadily increased.
Don Emmert / AFP via Getty Images
Apple
December’s financial results kick off at a record high. Expectations on Wall Street have been steadily rising, with particularly high expectations for iPhone sales after the company began the first sale of the iPhone 12 series in the mid-quarter.
The Street also has high hopes for MacBook sales, driven by the debut of the first laptops powered by Apple-designed processors, and a continuing wind in the back of the pandemic-driven work-from-home trend. Throw in expectations for continued strong demand for iPads, wearables and services and you have the recipe for a strong quarter.
The only question is whether expectations have gone too far.
Apple (ticker: AAPL) did not provide guidance for the quarter, adding an element of volatility to this report. The consensus on the street calls for revenue of $ 102.8 billion and earnings of $ 1.40 per share. For the seasonally milder March quarter, The Street sees $ 78.9 billion in revenues and earnings of 90 cents a share.
According to street consensus estimates, as tracked by FactSet, iPhone revenues should grow 6.4% to $ 59.6 billion, double-digit across all other categories. According to consensus, iPad sales are $ 7.4 billion, up 23.4%; Mac Sales of $ 8.6 Billion, Up 20.4%; portable sales of $ 11.5 billion, up 14.8%; and services revenue of $ 15.2 billion, an increase of 19.3%.
Investors will also like to see if the company continues to provide profit advice.
On Friday, Cowen analyst Krish Sankar reiterated his Outperform rating on Apple, raising his price target from $ 133 to $ 153. Sankar expects the company to exceed expectations for the quarter, both up and down, driven mainly by the strong demand for iPhone. He expects $ 104.5 billion in revenues and earnings of $ 1.46 per share. The analyst estimates that Apple sold 77 million iPhones in the quarter, an increase of 97% consecutively and 7% year over year. He expects iPhone sales of $ 60.1 billion, up 7% from a year ago, while service revenues are up 26% to $ 16 billion. Apple remains Sankar’s top choice in the IT hardware sector.
Morgan Stanley analyst Katy Huberty reiterated her assessment of Overweight on Apple stock last week, raising her price target from $ 144 to $ 152. She writes that her audits show that Apple saw strength in its product and services portfolio in the past quarter. driven by the adoption of 5G iPhone, the trend of working and learning from home, and continued engagement with the App Store.
“We are ahead of what we expect to be record quarterly pressures in December,” Huberty wrote in a research note. “Our recent talks suggest investors expect Apple to post solid, but not great, quarterly results for December. We disagree and think Apple is likely to report record quarterly sales and earnings. “
Huberty expects double-digit revenue growth across all revenue segments, with “risks up” for iPhones, Macs and Services. Its estimated revenue for the quarter is $ 108.2 billion, well above the consensus of $ 102.6 billion. She sees earnings for the December quarter of $ 1.50 a share, above the street at $ 1.40.
Huberty thinks the iPhone 12 was Apple’s most successful product launch in the past five years. She forecasts 78 million iPhones shipped in the quarter at an average retail price of $ 825, delivering 14% revenue growth to $ 63.9 billion – twice the growth rate the Street consensus currently expects for iPhone revenue.
Loop Capital analyst Ananda Baruah recently reiterated his Buy rating, raising his target price from $ 131 to $ 155. Baruah wrote in a research note that he expects a “really big year” for Apple and he thinks signs should be clear with it. upcoming earnings report. Baruah thinks street numbers could rise significantly for both the short term and the entire 2021 calendar, driven by the power of both iPhones and Macs. Baruah also believes the company can benefit from healthy growth in iPad, AirPod, Watch and Services.
Evercore ISI analyst Amit Daryanani recently reiterated his Outperform rating on Apple stock as he raised his stock price target from $ 135 to $ 145. Daryanani pointed to a combination of better-than-expected unit demand and higher-than-expected average retail prices as consumer demand for the more expensive Pro and Pro Max versions of the new phone line evolves. He also noted “better growth in services,” seeing more than 30% growth in App Store downloads.
Apple shares closed at a record high of $ 142.92 on Monday. After rising 82% last year, the stock is up nearly 8% so far in 2021.
Write to Eric J. Savitz at [email protected]