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Apple (NASDAQ:AAPL) shares fell in premarket trading Friday as the tech giant offered color for the all-important December quarter and hinted that sales growth would slow for a fifth straight quarter. Several Wall Street companies cut their estimates and some said there was “a lot of noise” coming from Cupertino.
On the earnings conference call, Apple ( AAPL ) CFO Luca Maestri said iPhone revenue “will grow year-over-year in absolute terms,” but that the company’s total revenue is likely to be “similar to those of last year”, below expectations of around 5% growth.
Mac sales will accelerate from the September quarter, average weekly Services revenue should grow by double digits, although iPad and wearables sales should fall, he added.
Wedbush Securities analyst Dan Ives described the results as “generally in line” but said investors should “breathe a sigh of relief” with December forecasts for iPhones and services.
“Simply put, … there will be a lot of noise when analyzing Cupertino’s core numbers and metrics,” Ives, who reiterated his Outperform rating and $240 price target, wrote in a note. “We are fundamentally concerned about iPhone growth, service revenue, gross margins (virtually above the street) and iPhone growth in China, which looks much better than feared, along with anecdotal comments Cook’s positive results.
Ives added that Apple (AAPL) stock could see weakness at the open due to “headline noise” and guidance, but suggested investors buy the stock as “growth has returned to the iPhone franchise,” Margins are increasing and services are registering double digits. growth.
Citi analyst Atif Malik maintained his Buy rating on Apple (AAPL) but lowered his price target to $230 from $240 as he cut fiscal 2024 and 2025 earnings estimates by 2% and 4%. %, respectively, mainly due to lower sales assumptions for the iPad and Mac.
Late last month, Apple (AAPL) introduced several new Mac computers, along with updated M3 chips in an effort to boost Mac sales, which fell 34% year over year in the September quarter to $7.6 billion.
TDCowen analysts reiterated their outperformance of Apple (AAPL), explaining that momentum in the services business and demand from emerging markets is offsetting any near-term consumer weakness.
They added that the company’s gross margins “remain impressive” and, although there are headwinds in the iPad and Mac segments, the newly refreshed products could further expand margins next year.
Barclays analyst Tim Long, who has the same rating on Apple, was a bit more pessimistic, saying he sees “limited benefit” to the estimates or earnings multiple, mainly due to “headwinds holding current levels of demand” from high-end consumers. , regulatory overreach, lack of design differentiation, and a “rich valuation” compared to the S&P 500.
Long cut his iPhone production unit estimates for the next two quarters by 1 million units each, to 72 million and 53 million, respectively.
