Analysts at UBS have lowered their quarterly iPhone and Mac sales forecasts ahead of Apple Inc (NASDAQ:AAPL)'s fourth-quarter earnings due after the market close on Thursday.
They lowered their iPhone forecast by 1% and Mac forecast by 4.7% to reflect soft demand across Apple’s two largest regions, the US and China.
They wrote in a note to clients that while demand trends have been soft throughout the quarter, checks indicate demand did not materially pick up in September.
“iPhone sell-through in the month of September came in at just 18.7 million units, down 11.6% year-over-year,” they wrote.
“In addition, we estimate Macs declined about 24% year-over-year in the quarter, the fourth consecutive year-over-year decline as excess inventory from September 2022 was worked off.”
They believe the softness in the quarter was driven by several factors, some structural and some transient.
As such, they now expect 4Q revenue of $88.1 billion, down from their prior forecast of $89 billion and below the Street consensus of $89.5 billion.
They expect 4Q earnings per share (EPS) of $1.36, down from their prior estimate of $1.39 and below the consensus of $1.40.
Looking ahead to fiscal 2024, the UBS analysts downwardly revised their 1Q fiscal 2024 and full-year fiscal 2024 revenue estimates by 3% and 1% and their EPS estimates by about 4% and 1%, respectively, on lower iPhone and iPad revenue.
They believe increased competition from Huawei in China is likely to be a headwind for Apple next year and, as such, are lowering their iPhone sales forecast.
“In the month of September, Huawei units increased 66% year-over-year while iPhone units declined 22% while the China market declined just about 1% indicating share shift was a contributor to iPhone weakness,” they wrote.
“Therefore, we lower our fiscal 2024 iPhone forecast to 232 million from 238 million given increased competition in China.”
They have a ‘Neutral’ rating on the stock and a US$190 price target. Apple shares closed at about US$171 on Tuesday.
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