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Apple will report its fiscal first quarter 2023 results on February 2. Here’s what to expect from holiday quarter earnings — and what Wall Street is forecasting.
Apple announced on Jan. 4 that it will hold its investor call on Thursday, Feb. 2 at 2 p.m. Pacific, 5 p.m. Eastern to discuss the release of its first quarterly fiscal results from earlier in the day. Based on the usual timeline for results, Apple should release details about half an hour before the call itself.
Before the call, CEO Tim Cook and Luca Maestri will discuss Apple’s health over the past three months, including product launches and sales, adverse events and other economic headwinds that could affect the quarters ahead.
As is customary for Apple since the start of the pandemic, the company did not provide formal revenue guidance for the quarter at the time of its previous earnings report.
Earnings for the quarter tend to be the highest due to Apple’s highly seasonal sales, as well as a list of major product launches.
However, unusually for the quarter, Apple issued an unusual report on iPhone production in November. Due to COVID-19 issues at Foxconn’s factory in Zhengzhou, deliveries of the iPhone 14 Pro and iPhone 14 Pro Max were interrupted, which Apple notified.
At the time, the press release admitted that the plant was operating at a “significantly reduced capacity”, though it has since caught up. Apple also said it continued to see “strong demand” for the Pro models, but also expected lower shipments and longer customer wait times.
Apple’s Q1 2023 numbers should beat the significantly high numbers reported a year ago in Q1 2022. At the time, it reported an 11.2% year-over-year revenue increase to $123.9 billion, with net income of $34.6 billion, also a record and an annual increase of 20.4%.
For the first quarter of 2022, the iPhone brought in $71.6 billion in revenue, while Mac sales also brought in $10.8 billion in the quarter. Wearables, Home and Accessories had sales of $14.7 billion, Services saw a YoY increase to $19.5 billion, but iPad sales fell to $7.2 billion.
What is the Wall Street consensus on Apple’s holiday quarter?
As of Jan. 23, the analyst consensus for the quarter is earnings per share of $1.95. This translates into a quarter of $122 billion in revenue. This compares to $123.9 billion in the year-ago quarter.
The consensus on next-quarter revenue currently stands at $98.2 billion, but most analysts in question voted in favor of the release of the new Mac Pro, updated Mac minis, and a large second-generation HomePod.
Individual analysts on Apple
The iPhone 14 Pro’s shipping issues have been a concern for analysts examining the company’s fortunes, with lower shipping forecasts from the models believed to have a major impact on revenue. However, some believed that shipments would instead be pushed to Q2 2023 sales.
At one point in January, Apple’s market cap dipped below $2 trillion, with investors wary of supply chain issues and listening to analyst discussions about the company’s fortunes.
Daniel Ives and John Katsingris, Wedbush
Wedbush cut its price target for Apple from $200 to $175 on Jan. 4, citing it as a more “uncertain environment” for trading and demand headwinds.
“Apple remains our preferred tech name,” the company said, insisting it maintained its “Outperform” rating for the stock, but supply chain scrutiny has been “clearly mixed ahead of the coming quarters,” with Apple apparently also some orders for products.
On the iPhone, demand for the iPhone 14 Pro is more stable than feared, and the “overall demand environment is believed to be more resilient than Street expects.”
Samik Chatterjee, J. P. Morgan
On Jan. 19, JP Morgan warned investors that it believes demand across the entire Apple product catalog is falling slightly. Viewing earnings as a “difficult setup” due to supply headwinds turned concerns into “demand issues for the Mar-Q and beyond,” the company believes.
Revenue and earnings for the first quarter of 2023 will be “modestly below consensus expectations,” but the miss should be “more modest” than previously expected. JP Morgan also raised its December quarterly estimates on supply tracking, but added that weakness in underlying demand will make next quarter “equally tough”.
After lowering its December 2022 price target from $200 to $190, JP Morgan went further in January and pushed it to $180.
In a Jan. 22 note, Canaccord Genuity Capital Markets had lowered its price target for Apple from $200 to $170 while reaffirming its “buy” rating for stock.
Demand for the Pro model iPhones has been disappointing, but believes some lost December sales will carry over into March. Recent channel checks indicate that a four-week wait for the premium models has all but evaporated.
Overall demand has slowed despite strong sell-through for iPhones, it adds, painting a more pessimistic picture for 2023 as a whole. There is a $68.3 billion forecast for iPhone sales in the first quarter, with a full-year estimate of $199.6 billion.
Other hardware is also at risk of a significant drop in demand, with the higher price points of new Macs making it difficult for Canaccord to see if consumers are still “willing to invest in more expensive products” given a tough macroeconomic environment. background.
On Jan. 13, Rosenblatt Securities cut its price target by $24 to $165, citing delays in iPhone production and “macro services headwinds” to blame.
A survey in December found that fewer people were willing to buy or have bought an iPhone 14 than a similar survey in September, with purchase intent for the iPhone 14 Pro Max dropping from 44% in September to 34% in December for that group.
Rosenblatt also echoed reports that the App Store has slowed, including a double-digit percentage decline in the December quarter following growth earlier this year, which “may reflect weakening gaming revenue.”
In the end, the analysts expect improvements and offers that will allow investors to view this as “a throwaway quarter” and “focus on later periods” instead.
In a Jan. 23 note to investors, UBS said it expects revenue of $120.3 billion for December and earnings per share of $1.93, down from a consensus of $122.9 billion and $1.96. Soft holiday sales of Pro model iPhones due to Zhengzhou’s factory troubles have led UBS to forecast 79 million units shipped in the quarter, up from 80 million on consensus.
Despite the lower sales, UBS believes the strong euro, pound, yen and yuan against the dollar could work in Apple’s favor for its finances.
AppleInsider will add more analyst forecasts ahead of the earnings report.
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