Apple Inc (NASDAQ:AAPL, XETRA:APC) is expected to deliver an in-line fiscal third-quarter performance, with UBS forecasting steady iPhone growth and Services revenue broadly tracking expectations despite ongoing supply chain pressures.
UBS expects total revenue to come in at $107.8 billion, slightly below Visible Alpha consensus of $108.1 billion, while forecasting iPhone revenue of $53.3 billion, roughly in line with consensus and representing about 20% year-over-year growth.
The analysts wrote that channel checks suggest Apple’s iPhone business gained market share during the quarter, supported by pricing trends and continued demand for higher-end smartphones. UBS noted that Apple was the only major smartphone vendor not to raise prices during the June quarter, which helped the company gain share across key markets including the US, Europe and China.
The firm also highlighted that rising component costs, particularly for memory, have benefited premium smartphone demand as consumers have continued to favor higher-priced devices over mid-range and lower-end models.
UBS expects the iPhone 17 lineup to have taken share during the quarter, though the analysts cautioned that the market may already be pricing in stronger-than-expected results. Apple shares are trading at roughly 35 times forward consensus earnings, which UBS views as limiting the potential risk-reward profile.
Services revenue is expected to grow around 13% on a foreign exchange-neutral basis, according to UBS, with limited upside due to challenges affecting App Store revenue and Google search-related payments.
UBS forecasts diluted earnings per share of $1.84, slightly below Visible Alpha consensus of $1.87. The firm noted that earnings could receive a modest boost if operating expenses come in at the lower end of Apple’s guidance range, which UBS estimates would be around $18.8 billion.
The analysts expect gross margin for the June quarter to come in at 48.0%, in line with consensus and within Apple’s guided range of 47.5% to 48.5%. UBS expects higher memory costs to pressure iPhone margins, partially offset by the benefit of lower-cost inventory flowing through cost of goods sold.
The firm estimates iPhone gross margin of approximately 39.5%, down about 250 basis points from the prior quarter. Looking ahead to the September quarter, UBS forecasts consolidated gross margin of 47.5%, with the benefit from lower-cost component inventory expected to fade.
UBS expects the potential launch of a foldable iPhone could provide some margin support, noting that the device could carry higher margins than existing premium models. However, the firm cautioned that iPhone margins could face pressure if Apple does not raise prices.
UBS maintained its $296 price target for Apple, based on a valuation of roughly 30 times its calendar 2027 earnings estimate of $9.86 per share. Apple shares traded hands at $335 on Friday, up 23% in the year to date.