Apple earnings: What do the iPhone production reports really mean? - MarketWatch

There’s statement astir what the reported accumulation cuts really mean. One caller report, from The Information, said that Apple told “at slightest 1 shaper successful China to instantly halt accumulation of iPhone 14 Plus components” arsenic the institution reassesses the device’s demand. Such a inclination could awesome spending unit among lower-income customers who mightiness typically opt for 1 of the base-level iPhones—or it could simply bespeak the deficiency of meaningful diagnostic improvements successful those circumstantial devices comparative to the Pro models.

Read: Apple’s rumored accumulation cutback ‘overshadows the underlying story’ of beardown iPhone 14 Pro demand

Additionally, a Bloomberg News study from precocious September indicated that Apple was declining to spell up with planned accumulation increases for the iPhone 14 household arsenic it alternatively targeted accumulation levels akin to past year. For Apple to nutrient lone arsenic galore phones arsenic it did past rhythm would hardly beryllium earth-shattering, but if the institution did so precocious set estimates, it could beryllium seeing consumer-spending signals that person ramifications for the company’s broader portfolio.

“Historically, Apple’s FY Q4 net results are not peculiarly important, but
forward guidance/commentary is,” Bernstein expert Toni Sacconaghi wrote up of Apple’s Oct. 27 report. That seems particularly the lawsuit successful the existent economical climate.

While Sacconaghi doesn’t deliberation the institution volition supply accepted quantitative guidance — absorption has offered thing much on the lines of “guidelines” since the pandemic began — helium predicts that Apple’s “qualitative commentary astir the request situation whitethorn yet signifier capitalist sentiment more.”

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Panic implicit imaginable accumulation cuts appears astatine likelihood with different seemingly healthier request indicators, according to Evercore ISI expert Amit Daryanani. He noted that portion pb times for the Pro-level models person travel down internationally, they remained unchangeable successful the U.S. astatine astir 25 days arsenic of his Oct. 18 enactment to clients. The phones went connected merchantability starting successful September.

“Demand has remained beardown and is successful stark opposition to caller concerns astir a slowdown,” helium wrote. Further, Apple could beryllium realizing higher mean selling prices fixed the indications that Pro devices are selling amended than the cheaper base-level ones.

Here’s what to ticker for successful the company’s fiscal fourth-quarter report.

What to expect

Earnings: Analysts tracked by FactSet expect Apple to station $1.27 a stock successful net for the September quarter, up from $1.24 a stock a twelvemonth before. On Estimize — which crowdsources projections from hedge funds, academics, and others — the mean estimation calls for $1.30 successful net per share.

Revenue: The FactSet statement calls for $88.7 cardinal successful revenue, up from $83.4 cardinal a twelvemonth earlier. Those contributing to Estimize expect $88.6 cardinal connected average.

Analysts tracked by FactSet are looking for Apple to station $43.4 cardinal successful iPhone revenue, up from $38.9 cardinal a twelvemonth prior. They’re besides looking for $7.7 cardinal successful iPad gross and $9 cardinal successful Mac revenue, some of which would people declines from year-earlier figures. The institution posted $8.3 cardinal successful iPad gross and $9.2 cardinal successful Mac gross during the aforesaid play successful 2021.

Analysts task $8.9 cardinal successful wearables, home, and accessories revenue, up from $8.8 cardinal a twelvemonth before. And they’re calling for services gross to apical $20 cardinal for the archetypal clip astatine $20.1 billion. Apple posted $18.3 cardinal successful gross for that class a twelvemonth ago.

Stock movement: Apple shares person gained aft lone 3 of the company’s past 10 net reports. The banal has fallen 19% truthful acold this year, portion the Dow Jones Industrial Average DJIA, +2.43%, which counts Apple arsenic a component, has mislaid 17% and the S&P 500 scale SPX, +2.36% has declined 23%.

Of the 41 analysts tracked by FactSet who screen Apple’s stock, 32 person bargain ratings, 7 person clasp ratings, and 2 person merchantability ratings, with an mean terms people of $143.39.

What other to ticker for

One cardinal contented crossed net reports this rhythm is the antagonistic interaction of the stronger U.S. dollar. While Apple’s absorption squad predicted astir 3 months backmost that overseas speech could person a 600-basis-point antagonistic interaction connected income maturation successful the September, D.A. Davidson expert Tom Forte notes that “the U.S. dollar strengthened against a handbasket of currencies that we judge are important to Apple” during the quarter. These see the British lb GBPUSD, +0.61%, the Canadian dollar USDCAD, -0.93%, the euro EURUSD, +0.76%, and the Japanese yen USDJPY, -1.79%.

He’ll beryllium watching for signs of a “bigger-than-expected headwind from the beardown U.S. dollar” erstwhile Apple posts results.

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Morgan Stanley’s Erik Woodring is funny successful the effects of an other week successful Apple’s December quarter. He noted that successful fiscal 2017, the past clip Apple had a 14-week vacation quarter, “both merchandise and services grew astatine an above-seasonal complaint fixed the other vacation week included successful the period of December.”

Consensus estimates whitethorn not afloat bespeak the imaginable for Apple to payment from this dynamic.

In general, helium sees contention connected Wall Street implicit however Apple’s December 4th volition play out, which is wherefore the company’s “directional” outlook for the play volition beryllium “critical” successful his view.

Woodring volition besides beryllium watching for expectations connected the services trajectory successful the December period, “although astir investors are aligned that services gross maturation should accelerate” successful this quarter.

See also: Apple introduces caller iPad and iPad Pro with velocity enhancements

Barclays expert Tim Long thinks Apple’s iPad and Mac categories tin bushed expectations for the latest quarter, driven successful portion by improved supply. The machine concern besides benefits from shipments of caller M2 Macs.

He’s little upbeat astir results for the work and wearables categories, noting that the “App Store continues to weaken,” partially owed to macroeconomic issues but besides arsenic a effect of regulatory unit successful China. For the wearables business, helium says that specified products “are viewed arsenic much discretionary and person much macro sensitivity.”