apple Second-quarter earnings will be released after the market close on Thursday.
The company has set investor expectations low and could beat them even with weak sales growth. Apple said in February this year that it expected iPhone sales in the same period to be the same as the US$94.84 billion in the same period last year.
According to LSEG’s consensus forecast, analysts expect the following for Apple:
- Earnings per share: $1.50
- income: 90.04 billion U.S. dollars
According to estimates from StreetAccount, the performance of Apple’s various business units in the March quarter is expected to be as follows:
- iPhone revenue: US$46.31 billion
- Mac revenue: US$6.85 billion
- iPad revenue: US$5.95 billion
- Wearable devices, home and accessories revenue: US$7.8 billion
- Service revenue: US$23.12 billion
Analysts estimate Apple’s sales this quarter are expected to be approximately US$83.23 billion, with an annual growth rate of 1.8%. Apple shares are down about 10% this year, underperforming peers and the broader market. Some are worried that demand for the iPhone 15 may be weak in 2023.
But the biggest theme investors will be watching is overall trends in Apple’s third-largest market: China. In the fourth quarter of last year, sales in Greater China, which includes Hong Kong and Taiwan, fell 13%.
Worse, a recession could signal deteriorating conditions in a key market for Apple, where it makes the vast majority of its products.Over the past year, Chinese government agencies It is said Asking employees to reduce their use of “foreign” devices – iPhones – suggests Apple may not have the support of China’s national leadership.
Apple also faces growing competition from local companies such as Huawei, which recently launched 5G smartphones despite U.S. export controls on advanced chips.
“Apple has been downgraded significantly due to a weak iPhone 15 cycle and concerns about structural damage to Apple’s China business,” Bernstein analyst Toni Sacconaghi wrote in a report last week. ” He rates the stock an outperform.
But Sacconaghi doesn’t think Apple will ever be hampered by Chinese Communist Party sentiment, calling the current cycle of weakness “more cyclical than structural” and pointing to Apple’s historical volatility in the region.
“In strong iPhone cycles, Apple’s revenue in China typically grows much faster than Apple’s overall revenue as Chinese consumers embrace new phones,” Sacconaghi wrote. “As we are seeing now , strong embraces are often followed by several quarters of weakness (and often negative year-over-year growth).”
Third-party data on China is also insufficient.
According to data from Counterpoint Research, Huawei’s sales increased by 70% year-on-year in March, while Apple’s sales dropped by 19%, falling to third place. However, analysis of the data suggests “early signs of improving iPhone demand … are broader than previously expected,” UBS’s David Vogt wrote this week.
Meanwhile, state statistics show iPhone sales Down 33% in Februaryshipments fell for the second consecutive month.
Wells Fargo analyst Aaron Rakers said in a March report that iPhone sales this quarter may fall by 20% annually.
Expectations for the current quarter are not optimistic, and how Apple views the current quarter may be more important than March quarter results.
Morgan Stanley analyst Erik Woodring, who has an overweight rating on the stock, wrote in an April note: “Apple’s earnings report/guidance ‘better than worries,’ There’s potential for a relief rally/higher share price “This creates a tricky setup that we don’t think investors necessarily need to get out front. “
Apple has not provided guidance since 2020, but company executives have provided data points that analysts can use to forecast sales. “Revenue and gross margin guidance for this quarter’s June quarter will be critical,” Woodring wrote.
Apple also typically updates investors during its second-quarter earnings report on how much it plans to spend on stock repurchases for the rest of the year.
“We expect Apple to update its capital return plans in its March quarter earnings and do not expect any material deviations from recent plans,” Woodring wrote. In May 2023, Apple said it had authorized an additional $90 billion in funding Repurchase.
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