Apple Inc. never fails to keep investors on their toes, and this week is no exception.
On Thursday, Wall Street will be rewarded with insights from Apple’s earnings call for what is typically considered the least exciting quarter. While the tech giant will discuss spring sales, all eyes are on the forecast for the current quarter, which often includes early sales of the next-generation iPhone model.
The burning question: Will Apple unveil the highly anticipated iPhone 15 in the upcoming September quarter? Recently, BofA Securities cautioned that production issues could delay its launch by a few weeks, pushing sales into the December quarter.
This uncertainty brings us back to Apple’s forecast – a puzzle that is harder to solve these days. In the past, Apple would provide a numerical expectation for total revenue, allowing investors to gauge the expected iPhone arrival date. However, since the pandemic hit, Apple has shifted away from traditional guidance and now offers hints about revenue performance relative to previous periods.
When Apple drops these breadcrumbs during Thursday’s call, Wall Street may gain some insights into the company’s plans for the next iPhone launch. Yet, in the grand scheme of things, this mystery may not carry much weight. Even if the iPhone isn’t ready for sale by the end of September as it was last year, loyal customers will likely wait a bit longer to get their hands on the new device.
According to Barclays analyst Tim Long, the hardware guidance could fall short of Street estimates due to potential delays with the iPhone 15. However, this might not have a significant impact on the stock, as bulls may anticipate a stronger December quarter.
In other news, Apple has been labeled as the most “boring” buy-rated stock – and surprisingly, that’s actually a positive attribute.
Apple’s September-Quarter Outlook: Analysts Remain Optimistic
Analysts tracked by FactSet anticipate that Apple will report $90.15 billion in sales for the September quarter, which is consistent with the previous year. However, their projections for the June quarter indicate a slight decline, with expected revenue of $81.74 billion compared to $82.96 billion in the same period last year.
Hardware Business Performance
Within the hardware business segment, analysts forecast a decline in revenue for both the September and June quarters. They estimate $70.06 billion in revenue for the September quarter, down from $70.96 billion the previous year. For the June quarter, revenue is projected to be $61.89 billion, a decrease from $63.36 billion.
iPhone Sales Outlook
The FactSet consensus suggests that Apple is set to achieve $44.55 billion in iPhone revenue for the September quarter, marking an increase from $42.63 billion the previous year. However, analysts have a more conservative estimate for the June quarter, predicting an average of $40.23 billion in iPhone revenue, slightly lower than the $40.67 billion reported in the same period last year.
China vs. India
While concerns have been raised about Apple’s iPhone resilience in China, many analysts believe these concerns are exaggerated. Harsh Kumar of Piper Sandler asserts that Apple’s position in China remains solid and predicts that any decline in iPhone sales will be minimal, if at all. He further states that any potential weakness in Chinese sales can easily be offset by strong sales momentum in India.
As Apple prepares to release its fiscal third-quarter results, Wall Street will scrutinize the company’s commentary for indications of overall smartphone demand strength, particularly in China. Analysts remain optimistic about Apple’s performance and project flat sales for the September quarter compared to the previous year. Their estimates also suggest a marginal decline in revenue for the June quarter. Amidst concerns about iPhone resilience in China, many analysts assert that any potential sales decline will be offset by favorable sales momentum in India.