Market bellwether Apple, Inc. AAPL is scheduled to release its fiscal year fourth-quarter (Q4) results Thursday after the market close.
Given the macro and geopolitical tensions, analysts are guarded in their outlook.
What Wall St. Expects: Apple’s year-over-year revenue declining streak may not have stalled in Q4 amid lukewarm reception to its iPhone 15. Analysts, on average, expect revenue of $89.28 billion, down 0.97% from $90.15 billion in the year-ago quarter. This would mark a fourth straight quarter of year-over-year revenue drop.
Quarterly revenue is expected to climb 9.14% from the $81.8 billion reported for the seasonally weak June quarter.
The Street models earnings per share of $1.39, up from $1.29 in the year-ago quarter and $1.26 in the third quarter.
CFO Luca Maestri had said in August that fourth-quarter year-over-year revenue performance would be similar to the June quarter, which saw a 1% drop. The assumption was based on macroeconomic fundamentals not worsening from what prevailed then. He guided to a 2% points negative impact from adverse forex movement.
Morgan Stanley’s Erik Woodring said in a recent note that Apple will likely report in line to better-than-expected September quarter results, thanks to mid-single-digit year-over-year iPhone revenue growth and accelerating Services revenue growth.
Gross margin was at 44.52% in the previous quarter and 53.69% in the year-ago quarter. The company guided fourth-quarter gross margin to be between 44% and 45%.
Apple Product, Geographies: Woodring said he expects iPhone revenue of $45 billion compared to $39.67 billion in the third quarter. Maestri had in August guided to accelerating revenue performance for the iPhone and the Services business. Mac and iPad revenue will likely decline by double digits due to difficult year-over-year comparisons, especially for the Macs, he had said then.
Expectations for the different product categories, according to Street Account, are:
- iPhone revenue: $44 billion
- iPad revenue: $6.14 billion
- Mac revenue: $8.5 billion
- Other products: $9.4 billion
- Services: $21.42 billion
See Also: Everything You Need To Know About Apple Stock
Apple Outlook: Morgan Stanley’s Woodring sounded caution regarding the outlook for the December quarter, which encompasses the key holiday selling season. Apple will likely guide to a revenue range that is both below normal seasonality and the consensus expectations, he added. The analyst blamed the potential softness to iPhone supply shortages and uneven consumer spending,
Analysts expect revenue for $122.97 billion for the first quarter.
Woodring expects iPhone growth to trend below seasonality in the first quarter. He also noted headwinds for Mac demand from an uneven consumer recovery. App Store revenue will likely remain strong but it will unlikely offset the more challenging product setup, the analyst said.
Apple launched an M3-powered new MacBook Pro and iMac late Monday. Following the “Scary Fast” event, Oppenheimer analyst Martin Yang said, “Overall, we’re underwhelmed by the incremental upgrades, puzzled by a much shortened MacBook Pro release cycle, and disappointed by the lack of new information regarding Apple Silicon for AAA gaming.”
Apple Stock: Apple stock has gained 34.5% for the year-to-date period, underperforming the “Magnificent Seven” – a moniker given to the biggest mega-cap stocks. It has, however, outperformed the S&P 500 and the Nasdaq Composite indices.
The average analysts’ price target for Apple stock, according to data compiled by TipRanks, is $203.35, suggesting roughly 17% upside potential. Woodring has an Overweight rating and $210 price target for the stock.
In premarket trading on Thursday, Apple rose 0.71% at $175.21, according to Benzinga Pro data.
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