iPhone 14 gross sales in focus

Apple will report its fourth-quarter earnings for the quarter resulted in September after the bell on Thursday.

An important new data can be any particulars the tech large provides on how the iPhone 14 sequence is promoting.

Many traders can be watching to see if Apple’s latest iPhones, which went on sale late within the quarter, are on tempo for a progress cycle or if international macroeconomic circumstances have lastly began to weigh on the high-end electronics market.

“We do not imagine fundamentals are resistant to the macro backdrop, however we see the mixture of a resilient iPhone product cycle in relation to revenues moderately than volumes, in addition to margins, to ship outcomes that reveal resiliency above the low bar of investor expectations at the moment,” JPMorgan’s Samik Chatterjee wrote in a observe on Monday.

Apple may additionally see a lift from better-than-expected gross sales of iPads and Macs, which have been slowed by elements shortages in latest quarters. Apple mentioned in July that offer shortages may hit the corporate’s gross sales by $4 billion, however some analysts imagine that the corporate will say that they have been higher capable of handle the provision chain this quarter.

Apple hasn’t supplied official steerage since 2020, initially citing uncertainty pushed by the pandemic. However administration has supplied particular person information factors every quarter that enables analysts to again into the flexibility to forecast gross sales.

This is what Wall Road is anticipating, in response to FactSet estimates:

• Income: $88.79 billion
• EPS: $1.27

In July, Apple Chief Monetary Officer Luca Maestri mentioned that income progress within the September quarter can be bigger than the third quarter’s 2% annual progress.

Maestri additionally warned traders that whereas the high-margin companies enterprise would proceed to broaden, its progress charge would gradual from 12% in the course of the June quarter, citing the sturdy greenback and financial components.

Nevertheless, “most traders are aligned that companies income progress ought to speed up” in the course of the December quarter once more, in response to Morgan Stanley’s Erik Woodring.

Buyers can be intently watching what Apple says about that quarter. Any forecast or steerage that implies a lighter-than-expected vacation season may current the most important danger to shares.

“We don’t count on AAPL to offer income steerage for F1Q (Dec) as a result of ongoing macro uncertainty, however we imagine the corporate will recommend income progress will decelerate,” wrote Deutsche Financial institution’s Stanley Ho in a observe over the weekend.

Nevertheless, Apple gross sales seem to have remained sturdy, in response to an evaluation of iPhone wait instances and third-party estimates of the premium smartphone market.

“Steering commentary to doubtless function simpler provide, bettering progress in Providers and decrease FX headwinds, however unlikely to get particular progress steerage given macro uncertainty,” Chatterjee wrote in a observe.

One product class that might be hit by slowing demand is the corporate’s wearables division, which incorporates Apple Watch and wi-fi headphone gross sales.

“We imagine Wearables are probably the most discretionary product in Apple’s portfolio and subsequently most vulnerable to the pullback we’re seeing in client electronics spending,” Morgan Stanley’s Woodring mentioned in a observe.

Apple’s first fiscal quarter runs from October by way of the tip of December and is the corporate’s greatest of the yr, powered by elevated vacation spending and a launch schedule that places new merchandise in the marketplace within the fall.

Finally, analysts need to get a way on Thursday of how Apple may climate an upcoming storm that might damage discretionary spending and if shares will stay a protected haven as traders reassess different tech names.

Apple nonetheless has extremely sturdy free money circulate and spends scores of billions per yr on share buybacks and dividends. The inventory is down 16% yr thus far, whereas the Nasdaq Composite is off over 30%.

“We nonetheless view AAPL as a defensive title given sturdy [free cash flow] and estimated $90-100B capital returns in CY23 at the same time as premium smartphones and macro gradual additional,” Cowen analyst Krish Sankar wrote in a observe.

— CNBC’s Michael Bloom contributed to this report.