Apple reports earnings on Wednesday. Here’s what to expect.

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Apple

enters its financial results for the December quarter with its shares reaching the highest point. Expectations on Wall Street have been steadily rising, with particularly high hopes for iPhone sales after the company began initial sales of the iPhone 12 line in the middle of the quarter.

The Street also has high hopes for MacBook sales, driven by the launch of the first laptops equipped with Apple-designed processors and the pandemic’s continuing trend of working from home. Add to the expectations of continued strong demand for iPads, wearables and services and you’ll have revenue for a strong quarter.

The only question is whether expectations went too far.

Apple (ticker: AAPL) did not provide guidance for the quarter, which adds an element of volatility to this report. The Street consensus predicts revenue of $ 102.8 billion and earnings of $ 1.40 per share. For the seasonally milder quarter in March, Street sees $ 78.9 billion in revenue and profits of 90 cents per share.

Street consensus estimates tracked by FactSet indicate that iPhone revenues will increase 6.4% to $ 59.6 billion, with double-digit growth in all other categories. The consensus points to sales of iPads at $ 7.4 billion, up 23.4%; Mac sales of $ 8.6 billion, up 20.4%; wearable sales of $ 11.5 billion, an increase of 14.8%; and service revenue of $ 15.2 billion, an increase of 19.3%.

Investors will also be eager to see if the company again provides profit guidance.

On Friday, Cowen analyst Krish Sankar repeated his rating for Outperform for 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 lines, driven in particular by strong demand from the iPhone. He is projecting $ 104.5 billion in revenue and earnings of $ 1.46 per share. The analyst estimates that Apple sold 77 million iPhones in the quarter, an increase of 97% sequentially and 7% year after year. He sees iPhone revenue of $ 60.1 billion, an increase of 7% over the previous year, with service revenue growing 26%, to $ 16 billion. Apple remains Sankar’s top choice in the IT hardware industry.

Katy Huberty, an analyst at Morgan Stanley, last week reiterated her overweight rating on Apple shares, raising her target price from $ 144 to $ 152. She writes that her checks found that Apple saw strength in its portfolio of products and services in the quarter, driven by the adoption of the iPhone 5G, the trend to work and learn at home and continued involvement with the App Store.

“We are buyers ahead of what we expect to be an impression record in the December quarter,” wrote Huberty in a research note. “Our recent talks suggest that investors expect Apple to report solid, but not great, results in the December quarter. We disagree and believe that Apple is likely to post record quarterly earnings and earnings. “

Huberty expects double-digit revenue growth across all revenue segments, with “risks tilted to the upside” for iPhones, Macs and Services. Its revenue estimate for the quarter is $ 108.2 billion, well above the $ 102.6 billion consensus. She sees December quarter earnings of $ 1.50 per share, up from Street at $ 1.40.

Huberty believes the iPhone 12 was Apple’s most successful product launch in the past five years. It 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 that the Street consensus currently projects for iPhone revenue.

Loop Capital analyst Ananda Baruah recently repeated his Buy rating, raising its target price from $ 131 to $ 155. Baruah wrote in a research note that he expects a “really big year” for Apple and thinks that signs should be clear with the next earnings report. Baruah believes that there may be a material advantage for street numbers both in the short term and throughout the 2021 calendar, driven by strength on iPhones and Macs. Baruah also thinks the company can see the positive side of healthy growth in iPad, AirPod, Watch and Services.

Evercore ISI analyst Amit Daryanani recently repeated his Outperform rating for Apple shares, while raising his target stock price from $ 135 to $ 145. Daryanani pointed to a better combination of unit demand than expected and average sales prices higher than expected, as consumer demand trends towards the more sophisticated Pro and Pro Max versions of the new phone line. He also noted “better service growth”, given a better 30% growth in downloads from the App Store.

Apple shares closed Monday at $ 142.92. After rising 82% last year, the stock has risen about 8% so far in 2021.

Write to Eric J. Savitz at [email protected]