‘Sunny days in Cupertino’: Here’s what 4 Wall Street analysts expect from Apple’s fiscal 2nd-quarter earnings report

Apple CEO Tim Cook
Apple CEO Tim Cook.

  • Apple is set to report FQ2 earnings on Wednesday as investors wait to see if the company can continue its streak of earnings beats.
  • Analysts are predicting revenues of $77.35 billion and EPS of $0.99 per share.
  • Here is what four Wall Street analysts expect from Apple’s FQ2 earnings report.
  • Watch Apple trade live here.

Apple will report its fiscal second-quarter earnings after the market closes on Wednesday, and all eyes will be on iPhone sales and guidance as the Street debates whether we are seeing an iPhone “supercycle.”

The average analyst estimate for Apple’s upcoming earnings report includes revenue of $77.35 billion and earnings per share of $0.99, according to data from Yahoo Finance.

Over the last two years, Apple has beaten EPS, and revenue estimates 100% of the time.

Overall, Wall Street remains bullish on Apple’s prospects. The company boasts 26 “buy” or “strong-buy” ratings, nine “hold” ratings, and just two “sell” ratings from analysts.

Insider gathered four Wall Street analysts’ predictions for the tech giant’s fiscal second-quarter earnings report.

Goldman Sachs: A strong report is “likely,” but composition is what matters

Goldman Sachs analysts, led by Rod Hall, CFA, said that Mac and iPad sales will be a standout in the upcoming quarter. However, in Hall’s view, the really important growth figures are iPhone sales and guidance.

“Current high levels of both iPad and Mac demand are unlikely to be sustainable as the world re-opens, so another beat driven more by these areas may not be enough to drive the shares further,” Rod Hall, CFA, said.

“We continue to believe the trajectory of iPhone demand is the main determinant of whether Apple can make what we see as overly optimistic consensus forecasts for the end of 2021 and this may be the first quarter in which data points from Apple begin to confirm what supply chain adjustments already suggest,” Hall added.

The Goldman team criticized other Wall Street analysts for their belief in a “supercycle” of iPhone sales. The team said based on recent checks, they expect demand to fall off for iPhones after 2021.

Goldman Sachs holds a “sell” rating and a $83 price target on shares of Apple.

Wedbush: “Sunny days in Cupertino”

Wedbush’s Dan Ives expects an iPhone “supercycle” to be at the forefront of Apple’s earnings report on Wednesday.

The analyst said he believes Apple will beat both top and bottom-line estimates and has the potential to sell north of 240 million iPhone units in 2021.

“We have not seen a robust launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis,” Ives said.

“While the Street is forecasting roughly 220 million iPhone units for FY21, we believe based on this current trajectory and in a bull case Cupertino still has potential to sell north of 240 million units (~250 million could be in the cards – an eye-popping figure) which would easily eclipse the previous Apple record of 231 million units sold in FY15,” Ives added

Ives also said that the Street is worried about moderation in growth due to the chip shortage, but said he “strongly disagrees” with that assessment and that this is the most “robust” iPhone cycle he has seen in years.

Wedbush holds an “outperform” rating and a $175 price target on shares of Apple.

JP Morgan: Expecting “a revenue beat” with dividends and repurchases in focus

JP Morgan analysts said that the Street’s expectations for a revenue beat have been increasing amid rising demand for Macs and iPads.

The analysts forecasted upside in both Mac and iPad sales in Apple’s FQ2 report and predicted 18% year-over-year growth in services revenue.

The team also believes Apple’s guidance will be limited in the quarter, and will mostly indicate FQ3 is typically a slower quarter for the firm. A dividend increase and share repurchases are also in focus at JP Morgan.

“We expect another $50 billion authorization similar to last year and a high single-digit percentage increase in dividends,” the JP Morgan team added.

JP Morgan holds an “overweight” rating and a $150 price target on shares of Apple.

Bank of America: “iPhone sales, capital return in focus”

Bank of America analysts, led by Wamsi Mohan, said they expect a “strong” quarter from apple with revenues in the $83 billion to $85 billion range and EPS at $1.10.

Mohan and his team believe Apple is set to outperform due to a benefit from the work-at-home trend.

“The company continues to benefit from increased spending on electronics given the remote work/home environment and from government stimulus cheques to consumers,” the analysts wrote.

Mohan is modeling a 30% jump in App store revenue and expects gross margins to benefit from a better mix and FX rates.

BofA analysts also expect a $50 billion buyback program to be announced along with a 5% dividend increase.

The bank holds a “neutral” rating and a $155 price target on shares of Apple.

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Apple’s market value grows by $102 billion after report says the company aims to produce electric cars by 2024

Tim Cook
Apple CEO Tim Cook.

  • Apple climbed as much as 4.7% on Tuesday following a Reuters report on Monday afternoon that said the tech giant aimed to produce electric cars by 2024.
  • The company wants to compete in the electric-vehicle market with battery innovations to improve vehicle safety, packaging, and range, according to the report.
  • The news, published less than an hour before markets closed, lifted Apple to a 1.2% gain on Monday.
  • Apple’s market cap grew by more than $102 billion at intraday highs.
  • Watch Apple trade live here.

Apple gained 4.7% on Tuesday following a Reuters report on Monday that said the iPhone maker planned to produce electric cars by 2024.

The tech giant aims to compete in the rapidly expanding electric-car market with new battery technologies to improve vehicles’ safety and range, according to the report. That could “radically” cut down on battery costs, a source familiar with the plans told Reuters.

Apple’s market value grew by more than $102 billion at intraday highs.

Read more: Brooke de Boutray beaten 99% of her peers over the last 5 years and runs a fund that is up 148% in 2020. She shared with us 4 stocks she’s most bullish on heading into 2021.

The report, published less than an hour before markets closed, lifted Apple shares to a 1.2% gain on Monday. Tesla, which would likely serve as Apple’s greatest competitor in the automotive sector, extended losses and closed 6.5% lower.

Sources told Reuters that Apple planned to partner with other companies for some vehicle systems. Suppliers of lidar sensors rallied in early trading. Apple developed its own lidar sensors for the iPhone 12 Pro and iPad Pro models.

The report revived discussions of Apple’s Project Titan automotive plan after layoffs and a leadership shakeup spurred rumors that the project had died.

The company plans to incorporate a “monocell” design to concentrate battery cells and create more space in battery packs by doing away with various storage pockets, Reuters reported. The layout would allow for denser battery units and a longer range than layouts with more loosely packed cells.

Apple is also experimenting with lithium-iron-phosphate battery chemistry, which could be less likely to overheat than lithium-ion batteries, Reuters reported.

Read more: BANK OF AMERICA: Buy these 16 medtech stocks with strong fundamentals that are set to soar post-pandemic

But even Apple’s expertise in handling massive supply chains would likely be tested by vehicle production. Tesla spent nearly two decades building cars before turning a steady profit. Apple would need to collaborate with a slew of partners and venture into manufacturing processes not used for its existing hardware.

“If there is one company on the planet that has the resources to do that, it’s probably Apple. But at the same time, it’s not a cellphone,” a person who worked on Project Titan told Reuters.

Apple closed at $128.23 on Monday, up 76% year-to-date. The company has 75 “buy” ratings, 18 “hold” ratings, and three “sell” ratings from analysts.

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Apple will climb 29% from current levels as the iPhone 12 5G kicks off the strongest product cycle in 6 years, says Wedbush

Tim Cook
  • Shares of Apple could gain nearly 29% over the next 12 months as demand soars for the new iPhone 12, according to a team of Wedbush analysts led by Dan Ives. 
  • Wedbush upgraded its Apple 12-month price target to $160 from $150 on Wednesday. The analysts are maintaining their “outperform” rating for the stock. 
  • “For the key China region, demand remains very healthy with strong pent up demand for upgrades heading into holiday season for this latest iPhone 12 5G, which we would characterize as the strongest product cycle for Cook & Co. thus far since iPhone 6 in 2014,” said Wedbush.
  • Visit the Business Insider homepage for more stories.

Shares of Apple could gain nearly 29% over the next 12 months as demand soars for the new iPhone 12.

That’s according to a team of Wedbush Securities analysts led by Dan Ives, who just updated their Apple 12-month price target to $160 from $150, while maintaining their “outperform” rating for the stock. Shares of the tech giant currently trade around $124.

Wedbush analysts say that demand for the iPhone 12 5G in the US and China is stronger than initially expected. 

“With more order activity kicking in over the last few weeks for iPhone 12 our initial reads are very bullish and give us incremental confidence in our supercycle thesis on iPhone 12,” said the analysts.

After initially anticipating 65 million iPhones to fill the supply chain during the initial launch period, Wedbush now forecasts that number to be closer to 80 million. According to their analysis, the only iPhone with a similar growth trajectory was the iPhone 6 in 2014.

“For the key China region, demand remains very healthy with strong pent up demand for upgrades heading into holiday season for this latest iPhone 12 5G, which we would characterize as the strongest product cycle for Cook & Co. thus far since iPhone 6 in 2014,” said Wedbush. 

Read more:We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Wedbush also anticipates that 350 million of the 950 million iPhones worldwide are currently in “in the window of an upgrade opportunity,” which will lead to an “unprecedented upgrade cycle for Apple” as the holidays approach. Additionally, Apple could sell more than 240 million iPhones in 2021, said the analysts. The Street forecast is around 215 million units.

Wedbush added that China is a “key ingredient” for Apple. Roughly 20% of the iPhone upgrades will come from that region over the coming year, they said.

“In a nutshell, while services growth remains the key to the Apple re-rating story over the past six months, the hearts and lungs of the Apple growth story are built around iPhone installed base upgrades,” Wedbush said. ” With 5G now in the cards and roughly 40% of its ‘golden jewel’  iPhone installed base not upgrading their phones in the last 3.5 years, Cook & Co. have the stage set for a supercycle 5G product release.” 

 

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