Apple (NASDAQ:AAPL)
Analysts on Wall Street are anticipating strong results from Apple (NASDAQ:AAPL) for the fiscal second quarter, particularly from the iPhone, and an update on its capital return program, scheduled on May 4.
As an investor note shows, Baird analyst William Power, who rates Apple stock outperform, is optimistic about the company’s long-term eco-system advantages, high free cash flow, and capital returns.
Power forecasts that Apple will post profits of $1.41 per share and sales of $92.1 billion, with the iPhone contributing $47.9 billion.
A new capital return strategy from Apple is anticipated, with Power anticipating that it would “mirror” revisions made in previous years, such as a larger repurchase and a “slightly higher” dividend.
Power pointed out that although the S&P 500 sells at about 19 times projected profits, Apple is trading at 27.8 times estimated earnings in 2023 and 26.3 times in 2024. The premium above the S&P 500 is at its highest level since 2020.
Samik Chatterjee, an analyst at J.P. Morgan with an overweight recommendation on Apple stock, recently noted a “divergence” between the earnings print and the revisions in estimates and the share price due to “fundamental weakness” in hardware.
We believe that the downside to revenue earnings is limited despite being in a challenging macro that dividend and buyback support total return and earnings growth, and that AAPL stock is trading at 26x NTM P/E, within the current trading range of 22x-30x, and below the peak multiple of 30x, reinforce that valuations still have room despite outperformance of the shares [year-to-date] all support a positive outcome for the share price that diverges from the estimate.
Chatterjee anticipates more iPhone revenue for the quarter due to channel builds after last year’s inventory limitations. Still, guidance may be a concern due to continued global economic difficulties.
Wamsi Mohan, an analyst at Bank of America, predicts an “inline quarter” but warns that guidance may be less than expected due to slowing consumer spending.
Mohan, who has a neutral opinion on Apple stock, wrote, “We see iPhone sales staying stable (no major supply chain cuts) with some help from demand being pushed from [fiscal first-quarter] to [fiscal second-quarter] because of supply issues in [fiscal first-quarter].”
However, Mohan said other categories are also slowing, including the iPad, Mac, and wearables.
Analysts anticipate Apple to earn $1.43 per share on revenue of $92.84 billion.
Featured Image: Pexels @ Rubaitul Azad
