Apple Inc. AAPL is scheduled to report its fiscal first quarter results on Thursday, Feb. 1, and it's expected to be the company's biggest and most profitable quarter ever, according to AppleInsider.
The Analyst
Morgan Stanley's Katy Huberty maintains an Overweight rating on Apple's stock with a price target lowered from $205 to $200 ahead of next week's earnings report.
Key Metrics To Watch
Investors have reason to be "positively biased' into the December-ending quarter, which should show iPhone shipments "slightly down" in the U.S.; "slightly up" in Europe; and "up strong double-digits" in China, Huberty said in a research report. (See the analyst's track record here.)
The firm's proprietary AlphaWise data shows that Apple's market share in China after the iPhone 8 and X launches accelerated and saw sustainable momentum through mid-December,the analyst said.
Revenue from Greater China rose 12 percent in the September-ending quarter and likely saw a "similar step-up in growth" in the December-ending quarter, Huberty said. This should help Apple report 9-percent revenue growth in the December-ending quarter coupled with 13-percent earnings per share growth, she said.
The analyst is now modeling the following data points and metrics for Apple's Q1:
Total iPhone shipments of 80 million, up from prior estimate of 76 million.
iPhone average selling price of $819, up from prior estimate of $771.
Earnings per share of $4.12, up from a prior estimate of $3.79 per share.
Total revenue of $92.2 billion, up from a prior estimate of $86.3 billion.
Reports Of iPhone Weakness 'Mostly Noise'
Apple is expected to offer a brief glimpse into its March-ending quarter in conjunction with the earnings report, according to Morgan Stanley.
Multiple press and Wall Street analyst reports of underwhelming iPhone demand and lower supply chain orders that would result in a disappointing March-ending quarter are "largely noise," Huberty said. The majority of the noise around supply chain issues could be attributed to a faster-than-expected ramp of iPhone production in the December quarter and "inventory disparities across the supply chain" that are mostly corrected once products are fully ramped, she said.
Huberty is modeling Apple's March-quarter iPhone shipment forecast at 64.5 million, ahead of the consensus view of 61 million. The analyst is also modeling an iPhone ASP of $815, above the consensus estimate of $752.
If Apple guides its March-ending quarter in-line with the sell-side consensus, it would be sufficient to support the stock, the analyst said.
Price Action
Shares of Apple were trading lower by 0.13 percent at $173.99 after the open Thursday.
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Photo courtesy of Apple.
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