Analysts Weigh In Ahead of Apple Earnings
25 APRIL 2022 - Apple’s second quarter fiscal year 2022 earnings report and associated call are set for later this week. That means close to a week of analysts taking runs at how good numbers are likely to be, and why investors shouldn’t freak out if they’re not as good as expected. Apple 3.0 ran portions of a couple of notes of note last week. We’ll start with one from from our Mr. Mohan.
BofA Makes Case for Street-High $215 Apple Target
Regarding the March-quarter, BofA analyst Wamsi Mohan does not see runaway growth for Apple, though he does see growth. By his firm’s reckoning:
The App Store generated ~$6.6bn revenue last quarter, up 5.6% from the $6.3bn for the same quarter a year earlier.
App Store downloads were up slightly, rising from 8.5bn for March-quarter 2021 to 8.7bn last quarter.
“Average dollars per download increased” a wee bit, from 74-cents-per a year ago to 76-cents last quarter.
Downloads in China were also up the tiniest bit, from 1.89bn in the March-quarter of FY21 to 1.91bn last quarter.
As for the future, Mohan & Friends think the next iPhone will drive huge upgrades, “driven by the need for higher connectivity which will enable new AR/VR applications…” He sees “higher growth in Services revenues,” he thinks Apple will keep doing the dividend and buyback things, and he thinks shares will outperform an otherwise slumping stock market.
Mr. Mohan has a “Buy” rating on Apple shares. His price target on the shares is a Street-high $215.
Morgan Stanley Expects Cautious Comments Around Apple Earnings
Looking a little less big picture is Morgan Stanley analyst Katy Huberty. Regarding the March-quarter, she thinks Apple probably beat expectations. Of Apple and her team, Huberty’s note says:
We expect Apple to post upside to March quarter consensus revenue estimates on the back of iPhone 13 and Mac strength, which we believe more than offset relative weakness in iPad and the App Store in the quarter.
As for the current June-quarter, she and hers expect Apple to strike a “cautious” tone. Is that due to Russia’s invasion of Ukraine? Is it concerns around inflation? While they may play a part, her primary concern seems to be COVID-centered lockdowns in the supply chain. Last Tuesday 19 April, Huberty wrote:
…with COVID-related lockdowns currently spreading through major Chinese manufacturing hubs such as Shanghai, Kunshan, and Zhengzhou – albeit with limited impact to Apple production schedules to date – we expect Apple to take a more cautious stance when providing commentary on the June quarter given the unpredictable nature of potential future lockdowns.
That said, new stuff is coming. She says her team “would buy any weakness ahead of product launch catalysts later this yr.” Huberty has an “Overweight” rating on Apple shares. Her price target on the shares is $210.
Shhh… Let’s Listen…
Expect more notes like the ones from Huberty and Mohan right up to Thursday. That is when Apple will post and host. Numbers for last quarter will hit Apple’s site after the close of trading at 1:30 Pacific/4:30 Eastern on Thursday 28 April. Then, Apple CEO Tim Cook, Apple CFO Luca Maestri, and various financial analysts will do the conference call thing. That goes off at 2PM/5PM. You can hear that as it happens on Apple’s Investor site. Apple will make it available as a podcast soon after. And - of course - we will recap the call here, on Friday 29 April.
