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Expectations for Apple’s earnings have been steadily rising.
Don Emmert / AFP through Getty Images
Apple
it is heading for the financial results of its December quarter, with its shares at a record high. Wall Street expectations have risen steadily, with high hopes for iPhone sales, after the company launched initial sales of the iPhone 12 range in the middle of the quarter.
Street also has high hopes for MacBook sales, driven by the debut of the first laptops powered by Apple-designed processors and a steady wind of the pandemic-driven work at home trend. Leave it waiting for a strong continuous demand for iPads, portable items 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 that quarter, which adds an element of volatility to this report. The street consensus calls for $ 102.8 billion in revenue and $ 1.40 a share in profits. For the seasonally softer March quarter, the street sees revenue of $ 78.9 billion and profits of 90 cents a share.
Street consensus estimates, followed by FactSet, call for an increase in iPhone revenue of 6.4% to $ 59.6 billion, a double-digit increase in all other categories. Consensus has iPad sales at $ 7.4 billion, up 23.4 percent; Mac sales of $ 8.6 billion, up 20.4%; wearable sales of $ 11.5 billion, up 14.8%; and $ 15.2 billion in service revenues, up 19.3%.
Investors will also be eager to see if the company resumes providing earnings guidance.
On Friday, Cowen analyst Krish Sankar repeated his Outperform rating on Apple, raising its target price to $ 153 from $ 133. Sankar expects the company to exceed expectations for the quarter, both on the top and bottom line, driven mainly by strong demand for the iPhone. It projects revenues of $ 104.5 billion and profits of $ 1.46 per share. The analyst estimates that Apple sold 77 million iPhones in that quarter, up 97% sequentially and 7% year-over-year. He sees iPhone revenue of $ 60.1 billion, up 7% from a year ago, with revenue from services up 26 percent to $ 16 billion. Apple remains Sankar’s best choice in the IT hardware sector.
Morgan Stanley analyst Katy Huberty reiterated her overweight rating on Apple shares last week, raising her price target to $ 152 from $ 144. She writes that her verifications show that Apple registered strength in its portfolio of products and services in that quarter, determined by the adoption of iPhone 5G, the tendency to work and learn from home and the commitment sustained with the App Store.
“We are buyers ahead of what we expect to be a record print in the December quarter,” Huberty wrote in a research note. “Our recent conversations suggest that investors expect Apple to launch solid, but not great, results in the December quarter. We disagree and believe that Apple may report record quarterly revenue and earnings. “
Huberty expects double-digit revenue growth in all revenue segments, with “low growth risks” for the iPhone, Mac and Services. Its revenue estimate for that quarter is $ 108.2 billion, well above consensus, at $ 102.6 billion. She sees profits for the December quarter of $ 1.50 a share, above the street at $ 1.40.
Huberty believes the iPhone 12 has been Apple’s most successful product launch in five years. It forecasts 78 million iPhones delivered in the quarter at an average selling price of $ 825, delivering a 14% increase in revenue to $ 63.9 billion – twice the growth rate that Consensus Street projects in present for iPhone revenue.
Ananda Baruah, Loop Capital analyst, recently repeated its Buy rating, raising its target price from $ 131 to $ 155. Baruah wrote in a research note that he expects a “very big year” for Apple and believes that the signs should be clear with the next revenue report. Baruah believes that there could be positive material in terms of street numbers both in the short term and throughout the 2021 calendar, determined by the power of both iPhones and Macs. Baruah also believes the company could see healthy growth in the iPad, AirPod, Watch and Services.
Evercore ISI analyst Amit Daryanani recently repeated its Outperform rating on Apple shares while raising its price target per share to $ 145 from $ 135. Daryanani pointed to a combination of better-than-expected unit demand and higher-than-expected average sales prices, as a trend in consumer demand for the Pro and Pro Max versions of the new phone line. He also noted a “better increase in services”, given a better 30% increase in downloads from the App Store.
Apple shares closed Monday at a record $ 142.92. After adding 82% last year, the stock has been close to 8% so far in 2021.
Write to Eric J. Savitz at [email protected]