Apple Inc (NASDAQ:AAPL) is expected to report a year-over-year decline in sales but higher earnings for the fourth quarter when it releases its latest financial results after the market close on Thursday, November 2.
Wall Street analysts, on average, expect the iPhone maker to report a 1.2% drop in revenue from $90.15 billion to $89.03 billion, according to Zacks Investment Research.
They anticipate a 7.8% increase in earnings per share (EPS) from $1.29 to $1.39.
For full-year fiscal 2023, analysts expect revenue of $382.82 billion and EPS of $6.05, down from revenue of $394.33 billion and EPS of $6.11 for the previous fiscal year.
Analysts at the Bank of America (BoA) expect Apple to report 4Q earnings in line with the Street estimates, projecting revenue of $90.5 billion and EPS of $1.40.
They project iPhone sales of 49 million, slightly below the Street forecast of 50 million.
“In constant currency, we model a slight deceleration in revenue growth for 4Q versus 3Q given our expectation for a weaker consumer spending environment,” they wrote.
“However, in our opinion, revenue and EPS estimates, which declined earlier this year, have likely bottomed out, and we do not expect further major negative revisions barring a major recession.”
The BoA analysts see Licensing, Subscriptions and the App Store remaining the main contributors to Apple's Services revenue.
“On a reported basis, Services revenue growth accelerated to 8% year-over-year in the June quarter (versus 5% year-over-year for the March quarter), and we model a further acceleration to 12% year-over-year for the September quarter,” they wrote.
“We model the next several quarters maintaining Services growth at that double-digit rate (12% year-over-year).”
iPhone 15 sales strong, data shows
On Apple’s guidance for 1Q fiscal 2024, the December quarter, the analysts noted that the company faces tough comparisons in certain categories given a year-over-year headwind from an extra week in the December 2022 quarter.
But they also pointed out that the impact of that extra week was mostly offset by last year also having supply chain and iPhone availability issues and a very negative forex headwind across Apple's entire portfolio.
They cited recent data that indicates the availability of the iPhone 15 series has improved significantly and data thus far suggests a marginally stronger cycle so far for the iPhone 15 versus the iPhone 14.
“We model year-over-year constant currency revenue growth of 6% for 1Q (negligible impact from forex), versus flat year-over-year for 4Q,” they wrote.
“We expect gross margins to remain stable (43%) in the December quarter despite commodity pricing starting to become less favorable.”
Ahead of Apple’s results, the BoA analysts reiterated their ‘Neutral’ rating on the stock, citing the positives of new product launches as offset by weaker consumer demand trends, and awarded it a US$208 price objective.
Apple shares traded higher ahead of its results, up 1.8% at US$177 in the early afternoon on Thursday.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on X, formerly known as Twitter, @emilyjjarvie