Apple, Inc. AAPL is scheduled to report its fiscal year second-quarter results Thursday after the close. The report assumes importance because investors hinge their hope on solid earnings from the company to reignite the market momentum.
Pointers Positive: Apple should report at least in-line iPhone revenue, Wedbush analyst Daniel Ives said in a note, citing the firm's Asia supply chain checks. The analyst sees some upside in iPhone shipments, premised on a clear uptick in demand around the key China region during the March quarter.
Higher average selling prices, or ASPs, and overall upgrade activity on the iPhone Pro 14 could help offset shaky macro fundamentals, the analyst said. The analyst estimates that ASPs were bumping up toward $900/$925 on iPhones, adding that it is a "noteworthy trend heading into the next iPhone cycle."
The uptick in App Store should keep services revenue stable, Ives said.
Both combined should translate into headline numbers that should at least meet Wall Street expectations, Wedbush said.
The firm expects the services business to reaccelerate to a double-digit trajectory over the coming quarters. It based the optimism on another 100 million+ new iPhone users added to the Apple ecosystem over the past 16 months, improving attach rates on services and price increases.
Overall the service business is worth $1.2 trillion to $1.3 trillion, the firm added.
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China Momentum Intact: Apple has gained about 300 basis points of market share in China over the past 12 months, the analyst said. He also noted that the U.S./Europe demand is holding up well.
Forex May Not Bite: Overall forex headwinds have abated a bit, thereby creating an easier year-over-year comparison, Ives noted.
Forward Outlook: Ives said he expects relatively conservative guidance for the June quarter, given it is the one ahead of the anniversary iPhone 15 launch, potentially slated for September.
Ives maintained his Outperform rating and $205 price target for Apple stock.
Apple ended Monday's session down 0.05% at $169.59, according to Benzinga Pro data.
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