Apple (NASDAQ:AAPL)
After reporting fiscal second quarter data, Apple (NASDAQ:AAPL) shares jumped on Friday, rising more than 5% on the back of positive feedback for the iPhone sales numbers. However, the reaction to the IT giant’s forecast for the quarter ending in June was mixed.
The growth rate for the next quarter is “well below” Wall Street’s expectation and in line with his own estimate, according to Tim Long, an analyst at Barclays who has an equal-weight recommendation on Apple stock.
According to the letter Long sent out to investors, “We continue to witness demand deterioration across hardware categories echoing negative sentiment throughout supply chains — Foxconn, Taiwan Semiconductor, Qualcomm. Initial assessments of the supply chain indicate that manufacturing of the iPhone 15 will be about on pace with that of the iPhone 14 in the second part of the year, but with a lower pro mix than was anticipated.
According to Long, Apple’s CEO Tim Cook and CFO Luca Maestri sounded “guarded” due to the macro uncertainties, citing declining sales of Macs and iPads and slumps in the advertising and gaming sectors.
Wall Street should have “further confidence that Cupertino is riding out this macro storm in Rock of Gibraltar-like fashion,” according to Dan Ives, an analyst at Wedbush Securities who has an outperform recommendation on Apple stock and who praised the “relatively upbeat” forecast.
Ives wrote in a note, “Overall, Cook talked about a stable consumer demand environment, with particular strength in emerging markets. As a result, Apple continues to bet aggressively on several key markets, with India in the lead.”
Analyst Michael Ng at Goldman Sachs, who has a buy recommendation, praised “better-than-expected” iPhone sales over time but warned that the business has dangers in a weaker economy since it depends on customers.
According to an analyst letter written by Ng, “Apple generated over 50% of its revenue from iPhones [in fiscal 2022], which is highly dependent on purchases driven by upgrades.” Replacement cycles might become longer due to macroeconomic headwinds, increased product longevity, or a lack of innovative new products, all of which could have a chilling effect on upgrade demand.
Jonathan Weber, leader of the Seeking Alpha Investing Group, said the results weren’t “good enough,” given the stock’s price.
Apple’s chief financial officer has predicted that the company’s June quarter results would be comparable to the March quarter, with foreign currency acting as a headwind of about 4 percentage points.
Services revenue is anticipated to be consistent with the March quarter, with some decline in mobile gaming and advertising. Operating expenditures are anticipated to be between $13.6B to $13.8B, while gross margins are predicted to be between 44% and 45%.
Featured Image:
