The upcoming earnings report from Apple (ticker: AAPL) for the June quarter may not be a groundbreaking growth story. Nevertheless, considering that the stock has already surged by 50% this year, there is little room for error. Despite this, the company’s optimistic analysts anticipate stronger growth in the future. As the world’s most valuable company, with a market cap of $3.1 trillion, Apple is poised for further gains.
Expectations for the Fiscal Third Quarter
Apple is set to release its earnings report after the close of trading on Thursday. Analysts predict sales of $81.9 billion for the fiscal third quarter, representing a modest 1% decrease compared to the same quarter last year. The projected profit is $1.19 per share, down by a penny from the previous year.
According to FactSet, iPhone sales are expected to contribute $40.3 billion to Apple’s revenue, a slight decrease of approximately 1%. Mac sales are anticipated to generate $6.6 billion, while iPad sales are estimated at $6.5 billion, both showing a decline of around 10%. These declines are likely to be offset by the “wearables, home and accessories” category, with estimated sales of $8.3 billion, reflecting a 3% increase. Additionally, services revenue is projected to reach $20.8 billion, indicating a 6% improvement.
The Importance of the “Greater China” Market
One crucial aspect of Apple’s quarterly performance will be its performance in the “Greater China” category, which includes mainland China, Taiwan, Hong Kong, and Macau. Analysts anticipate revenue of $13.6 billion from this region, representing a 7% decrease. Conversely, revenue from the Americas is expected to reach $38 billion, showing a modest increase of 1.5% compared to the previous year.
In summary, while Apple’s upcoming earnings report may not showcase exponential growth, analysts remain optimistic about the company’s future prospects. With a solid performance in the “wearables, home and accessories” category and steady services revenue, Apple’s position as the global frontrunner seems poised for further success.
Apple Expects Comparable Revenue Performance in June Quarter
Apple CFO Luca Maestri recently announced that the company’s revenue performance for the June quarter is expected to be similar to that of the March quarter, which saw a 2.5% decline compared to the previous year. Maestri also mentioned that currency fluctuations are anticipated to have a negative impact of around four percentage points on revenue, and the services business may encounter challenges in digital advertising and gaming due to macroeconomic factors.
Notably, both Alphabet (GOOGL) and Meta Platforms (META) surpassed Street estimates in their digital ad businesses during the same quarter, which could potentially be a positive factor. Additionally, if the dollar stabilizes, the currency impact may be less severe than initially projected.
Analyst Harsh Kumar from Piper Sandler offered insights in a research note, stating that concerns regarding Apple’s performance in the China handset market may be exaggerated. Kumar believes that the company’s earnings call will be well-received, thanks to the resilience exhibited by the Chinese and iPhone segments. Kumar reiterated his Overweight rating and raised his target price to $220, up from $180.
Dan Ives, an analyst at Wedbush, expects Apple to at least meet expectations in terms of iPhone revenue for the quarter, and even potentially exceed them. He points out that there has been a notable increase in demand for iPhones in the crucial Chinese region this quarter.