A customer service representative works with customers at the Apple store as shoppers return to indoor shopping after Los Angeles County eased restrictions at places like the Beverly Center in Beverly Hills on October 8, 2020.
Genaro Molina | Los Angeles Times | Getty Images
Apple is due to release its first fiscal 2021 quarter earnings on Wednesday, and analysts’ expectations are optimistic.
The company was unable to encourage investors in the fourth quarter, which ended on September 26, 2020, due to weak iPhone sales. But the weakness is probably due to the fact that people were waiting for the new iPhone 12, which only went on sale in October.
Wednesday’s earnings report will mark the first full season since Apple launched its new line of iPhones and subscription service packages.
The company’s stock rose about 1% in the pre-market, amid broader market gains.
Here’s what analysts are saying about the tech giant:
Morgan Stanley Research
Morgan Stanley analysts said in a note on Thursday that they expect a record quarter in December.
“Our recent conversations 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 of all time,” wrote the analysts, raising their price target for $ 152 out of $ 144. “In our opinion, the iPhone 12 was Apple’s most successful product launch in the past 5 years.”
The company pointed to the strength across Apple’s product and service portfolio, driven by the adoption of 5G, continuous remote work and learning and sustained involvement in the App Store. Analysts added that they expect double-digit growth year on year for Apple’s five revenue segments in the December quarter.
“Overall, our December quarter revenue of $ 108.2 billion is 5% above consensus (we are ahead of consensus in all segments except Services), while our $ 1.50 EPS is 7% above the consensus, “they said. “We expect the strength of demand to continue and our revenue and EPS estimates for fiscal year 21 are 5% above consensus.”
DA Davidson
The company said in a note on Thursday to customers that it believes the shares “look delicious” and has put its $ 133 target price under review.
“As we stated earlier, we believe that the first line of Apple smartphones on 5G networks is better positioned than investors appreciate for the following reasons: 1) operator support, 2) favorable discretionary income and 3) 1B working remotely and 1B learning remotely In addition, we attribute the recent strength of the shares to investors who are enthusiastic about this notion, “wrote Tom Forte, an analyst at DA Davidson.
The company said it will pay attention to iPhone sales trends, comments on privacy and advertising and possible implications of the new Biden administration.
“We project sales to increase 15.7% to $ 106,236 million, which is above the consensus forecast of $ 102,563 million,” said the company. “Note, Apple did not give a formal guidance, but expected double-digit growth for all product categories and iPhone, which expects single-digit growth. On profitability, we estimate $ 33.525 million EBITDA (for a margin of 31.6%), which is above the $ 31,763 million consensus. Finally, we project EPS GAAP of $ 1.52, compared to the $ 1.40 consensus estimate. “
AB Bernstein
The company expects Apple to post strong iPhone sales, but said there is no surprise due to a likely strong iPhone 12 cycle. Analysts, including Toni Sacconaghi, raised their first-quarter EPS estimates to $ 1.53 and EPS from FY21 to $ 4.26 due to higher iPhone ASPs, a weaker US dollar and strong Mac / iPad sales.
“Although our estimates are above consensus, we believe that our numbers are relatively in line with market expectations,” analysts wrote on Thursday. “We expect Apple to provide ‘guidelines’ instead of ‘guidance’ for the second quarter, but we are above consensus, probably due to the currency, and our expectation of a modestly stronger than normal seasonality due to the time of launch of the iPhone 12. “
The company said it would pay attention to Apple’s comments on potential smartphone share gains, ongoing regulatory concerns and the adoption of new Apple services and advertising, but said Apple needs something bigger to exceed expectations.
“AAPL has had a tremendous run and is traded online with major technology companies with higher growth rates. With 33x consensus 21 EPS and commercial expectations above those of Street, we struggle to see cases of material superior performance at AAPL in the absence of a surprise product announcement or migration to a packaged hardware subscription model, “wrote the newspaper.
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