Apple Inc (NASDAQ:AAPL) is positioned to deliver “another flex the muscles moment,’ when it reports earnings Thursday after the close, according to analysts at Wedbush.
The key, as ever, is iPhone revenue.
“Based on our recent Asia supply chain checks we believe Apple should post at least in-line June quarter iPhone revenues with upside likely,” the analysts wrote. “We believe iPhone units based on a clear uptick in demand around the key China region this quarter could show some upside despite the choppy macro as higher ASPs [average selling prices] and overall upgrade activity on iPhone Pro 14 carry the day for Cook & Co.”
The Street projects Apple to report a 0.8% drop in earnings per share from $1.20 in the year-ago quarter to $1.19, according to Zacks Consensus Estimate. Revenue is forecast to slow 2% from record third-quarter revenue of $82.96 billion in 2022 to $81.26 billion.
Notably, Apple is further than usual into the current iPhone cycle, with the iPhone 15 expected this fall, the analysts wrote.
“We would expect relatively conservative September guidance as this is all about the drumroll to the main event with the anniversary iPhone 15 launch slated for the mid-September timeframe,” analysts wrote.
“...[T]he handoff from iPhone 14 to iPhone 15 looks to be a ‘steadier transition’ than some other peak to valley iPhone cycles of the past. We also believe ASPs are bumping up towards a roughly $900 to $925 ASP on iPhones which is a noteworthy trend heading into the next iPhone cycle.”
Then there’s the growing Services segment, which Wedbush analysts argue is worth $1.3 billion to $1.4 billion for Apple’s “sum-of-the-parts valuation.”
Wedbush maintained its Outperform rating and $220 price target. It isn’t the only bullish analyst, as last week Goldman Sachs (NYSE:GS) published a note predicting an earnings beat.
Apple stock traded 0.1% higher midday Monday at $196.06.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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