Apple Inc (NASDAQ:AAPL, XETRA:APC) is expected to beat consensus estimates for its fiscal third quarter, according to Bank of America, even as the bank takes a more conservative view of iPhone seasonality tied to a staggered launch schedule.
BofA said investor focus will center on component cost inflation, the durability of gross margins, and the transition following the end of Tim Cook's tenure as CEO.
The bank forecasts fiscal third-quarter revenue of $109 billion and earnings per share of $1.89, above Street estimates of $108 billion and $1.87, implying revenue growth of 16% year over year, compared with Apple's guidance range of 14% to 17%.
BofA said iPhone build plans, including for Pro models, remain robust. However, the analysts have factored in a more conservative outlook given the staggered rollout this cycle: Pro, Pro Max and a foldable model launching in September, with the base model and Air arriving in March.
Higher prices are also part of that calculus. The bank noted the Street may not be fully reflecting this launch timing in its estimates.
On margins, BofA models product gross margin declining 190 basis points sequentially in the June quarter to 36.8%, with a further 280-basis-point drop in the September quarter to 34.1%. The bank views this as transitory, projecting a recovery to 38.5% in the December quarter as new iPhones, including the foldable, launch at higher prices, with a potential added boost from roughly $3 billion in tariff recovery.
Overall company gross margin is modeled at 48.2% for the June quarter, within Apple's guided range of 47.5% to 48.5%.
For fiscal fourth quarter, BofA is well below Street on revenue and earnings, forecasting $106 billion and $1.88 per share against consensus of $114 billion and $2.01, a gap the bank attributes largely to more conservative iPhone unit assumptions tied to the staggered launch.
On services, BofA expects fiscal third-quarter revenue growth of 14% year over year, in line with guidance. App Store growth has slowed, with SensorTower data cited showing 3.2% year-over-year growth in the quarter, down sharply from 9.8% in the prior quarter. BofA expects that softness to be offset by strength in iCloud and licensing.
BofA reiterated its Buy rating on Apple with a price objective of $380, based on 37 times its calendar 2027 estimated EPS of $10.29. The bank also nudged up its fiscal 2027 and 2028 EPS estimates to $9.91 and $10.89, respectively.
Apple reports fiscal third-quarter results after market close tonight.
