Big drum roll please, the world’s biggest company by market cap is about to enter the earnings arena; today after the close, Apple (AAPL) will report the September quarter’s (FQ4) financials.
The tech giant is now only fractionally ahead of Microsoft as both compete for the title of the world’s most valuable company, after MSFT closed the gap following its recent Q3 results. Can Apple match its rival’s exceptional print?
That remains to be seen, but while Microsoft’s cloud business has seen strong growth, Apple has been more susceptible to the current micro challenges, as supply chain issues have raised questions about the production rate of the iPhone 13.
Despite the supply headwinds, Evercore’s Amit Daryanani thinks the company has “largely procured enough capacity” for the initial launch, and therefore anticipates “modest upside” to overall expectations. That said, the analyst does believe “the magnitude of upside” will be down to supply and not demand issues.
In fact, Daryanani thinks there has probably been “strong” initial demand for the latest version of Apple’s flagship product. This is based on Evercore’s iPhone delivery tracker, which points to “continued increases” in iPhone lead times - the time between a customer order and its actual delivery.
Although since the pandemic’s onset, Apple has refrained from providing official guidance, the company did say it expects "strong double digits" growth.
Daryanani’s forecast calls for roughly a 30% year-over-year uptick with “elevated” margins based on a strong iPhone mix and growth for Apple’s Services business.
Issues investors should keep an eye on include the outlook for the iPhone, and the future impact of supply chain problems, namely “how will shortages impact various product lines.” Daryanani will also be looking out for any comments on the state of the App Store, following recent visits to the courts in the US, Japan and South Korea, due to accusations Apple is using its service to monopolize the markets.
In any case, Daryanani remains a fully-fledged Apple bull. “Net/net,” the 5-star analyst wrapped up, “Apple remains well positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.”
As such, there’s no change to Daryanani’s Outperform (i.e. Buy) rating or $180 price target. The implication for investors? Potential upside of 18%. (To watch Daryanani’s track record, click here)
Looking at the ratings breakdown, based on 16 Buys vs. 6 Holds, the consensus view is that AAPL stock is a Moderate Buy. Shares are expected to yield one-year returns of 11.5%, given the average price target comes in at $169.75. (See Apple stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.