Sunday, December 10, 2023

JP Morgan predicts declining quarters for Apple, except for March 2023, due to tailwinds from iPhone stock build.


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Apple is predicted to ship a “strong shareholder return” for 2023, however decrease demand for {hardware} by shoppers will see quick-time period hits to earnings for the June and September quarters.

Funding agency JP Morgan most not too long ago outlined for its clients what it expects Apple to produce over the following few months. Following that broadly optimistic account, the agency is now offering extra detailed predictions, which embrace an expectation of declining quarters — aside from March.

“Anticipate Mar-Q beat to targets on iPhone income tailwinds from channel stock construct,” says the agency in a word seen by AppleInsider. “We’re modestly elevating our income and earnings forecast for the Mar-Q to $94.9 bn/$1.49 from $92.7 bn/$1.44 (vs. consensus of $92.5 bn/$1.43).”

JP Morgan says that this “improved Mar-Q outlook is led by” its estimate that Apple will produce round 58 million iPhones as an alternative of the beforehand anticipated 54 million. That is “led by tailwinds from the channel constructing stock over the previous ninety days, and is partially offset by weaker demand for different {Hardware} classes.”

So Apple’s return to full manufacturing after its supply problems in late 2022 imply that it’ll have adequate iPhones to meet demand. However as different sources have famous, Apple units just like the Mac have seen demand fall.

JP Morgan predictions of Apple earnings for the March 2023 quarter (Souce: JP Morgan)

JP Morgan predictions of Apple earnings for the March 2023 quarter (Souce: JP Morgan)

The analysts describe this enchancment as giving “modest beats to the March-Q (F2Q) steering,” however “on the identical time anticipate [Apple] to problem steering for one more quarter of income declines” 12 months on 12 months for the June quarter. JP Morgan additional expects that there shall be “income declines y/y for the complete-12 months FY23, and modest downsides to earnings estimates as properly.”

“Whereas focus is beginning to already shift in direction of the potential launch of a VR headset in June and the iPhone 16 [sic] launch in September,” says JP Morgan, “the restricted modifications to estimates, despite a robust macro, goes to assist continued outperformance within the meantime.”

“We’re elevating our Dec-23 price target to $190 vs. $175 prior, despite decrease earnings estimates,” proceed the analysts, “as we see the earnings a number of increasing in response to the resilient positioning.” That is primarily based on a P/E a number of of about 27x versus about25x prior, on its calendar 12 months 2024 earnings estimate.

Total, despite the anticipated declines, JP Morgan says that Apple stays “a relative protected haven,” given the “robust macro” economic system state of affairs.

Apple will announce its subsequent monetary earnings report on Could 4, 2023.

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