Apple’s iPhone business was affected by the new coronavirus measures in China. The company’s upcoming earnings report will show how badly it was hit and how quickly it was able to recover.
The smartphone giant typically doesn’t communicate with investors outside of earnings calls and phone calls, but Apple AAPL
Executives issued a rare warning in November, revealing that pandemic-related restrictions at Foxconn facilities caused iPhone 14 Pro and Pro Max shipments to fall below expectations. I’m more concerned with Apple’s ability to recoup lost sales in the future.
The results also show whether Apple was able to maintain momentum in its Mac business after achieving a record quarter in this segment three months ago. Apple isn’t expected to beat that record this time around, but the Mac business could still be a source of upside amid iPhone uncertainty.
Read more: Apple’s earnings may depend on an unlikely hero amid iPhone uncertainty
Here’s what to expect when Apple announces the results Thursday afternoon.
what to expect
Earnings: Analysts tracked by FactSet expect Apple to earn $1.94 per share in the first quarter of the fiscal year, down from $2.10 per share in the same period last year. The average estimate is $1.98 per share, according to Estimize, which crowdsources predictions from hedge funds, academics and others.
Earnings: Revenue for the December quarter was $121.4 billion, down from $123.9 billion in the same period last year, according to FactSet consensus. Contributors to Estimize expect $122.4 billion.
Analysts tracked by FactSet expect iPhone revenue to fall from $71.6 to $67.8 billion. billion a year ago. Consensus estimates put iPad sales at his $7.8 billion, up from $7.2 billion the year before, and Mac sales at his $9.4 billion, down from $10.9 billion.
Analysts expect revenue from wearables, home and accessories to be $15.3 billion in the quarter, up from $14.7 billion in the same period last year. Service revenue is expected to rise from $19.5 billion to $20.4 billion.
Stock movement: Apple’s stock has risen after three of the company’s last five earnings reports, including the last two. The stock has fallen about 19% over the past 12 months, but is ahead of 9% by the start of 2023. Dow Jones Industrial Average DJIA,
Apple is a component of that, down about 5% in 12 months and up nearly 2% so far in 2023.
Of the 41 analysts tracked by FactSet, 30 have a buy rating, 9 have a hold rating, and 2 have a sell rating, with an average price target of $168.48.
Other Things to Note
Evercore ISI analyst Amit Daryanani sees a potential “downside” in the December quarter due to iPhone dynamics, but the decline in Apple’s share price is “an indication that Apple provides such a guide.” So long as failures should have a material impact on stock prices,” he said. indicates that it expects to recover lost sales as it moves into FY23. ”
Apple’s supply problems are easing, but that doesn’t mean the company is out of the woods.
“With supply chain challenges largely normalized, we believe AAPL is entering a period of slowing demand due to macro factors,” Cowen analyst Krish Sankar said in a note to clients. Apple “has been gaining share in the smartphone and notebook market over the past year, but the latest fieldwork suggests near-term product builds are lower than previous market expectations. I have.”
Sankar said he believes the iPad business has “benefited from seasonality and increased component availability,” but supply chain conversations suggest that “demand will slow down” within the Mac. showed that it has potential.
Apple hasn’t provided traditional guidance along with earnings, but Wall Street is nonetheless looking for clues about the future.
Bank of America analyst Wamsi Mohan said, “Given the December quarter saw a severely limited supply of high-end Pro models of iPhones, it is difficult to understand the potential demand trajectory. phone tone will matter,” he wrote.
His iPhone tracker “indicates that availability has normalized, concluding that demand may be softer than expected in the first half of 2023,” he wrote.
Read: Looking for clues on iPhone supply? Ask AT&T, Verizon, and T-Mobile