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Once again, the Apple story will be dominated by the strength of iPhone demand.
Hector Retamal/AFP via Getty Images
Apple
reported better-than-expected results for its December quarter late Thursday.
Revenue for the fiscal first quarter ended Dec. 25 jumped 11% to $123.9 billion with earnings of $2.10 per share.
Wall Street analysts had expected Apple (ticker: AAPL) to report revenue of $119 billion and profits of $1.90 a share.
Apple shares were up 3.3% in after-hours trading.
Apple posted strong results in most product categories in the quarter, led by the iPhone, which had sales of $71.6 billion, up 9.2% from a year ago, and well above the Wall Street consensus forecast of $67.6 billion.
Services revenue was $19.5 billion, up 23.8% from a year ago, and likewise ahead of expectations. Mac sales were $10.9 billion, up 25.1% from a year earlier. Sales in the wearables, home and accessories category were $14.7 billion, up 13.3%.
The one soft spot was the iPad, which had sales of $7.2 billion, down 14.1% from a year ago. The company had warned in September that iPad sales would be capacity constrained in the December quarter by supply chain issues.
“This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Tim Cook, Apple’s CEO. “We are gratified to see the response from customers around the world at a time when staying connected has never been more important.”
“The very strong customer response to our recent launch of new products and services drove double-digit growth in revenue and earnings, and helped set an all-time high for our installed base of active devices,” said Luca Maestri, Apple’s CFO.
Apple returned nearly $27 billion to shareholders during the quarter in the form of dividends and stock buybacks.
The company will provide commentary on its outlook—but likely not specific guidance—on a call with investors at 5 p.m Eastern. For the March quarter, Wall Street is expecting Apple to generate sales of $90.2 billion, with profits of $1.32 a share. That includes an expected decline in iPhone sales to $46.6 billion.
Evercore ISI analyst Amit Daryanani wrote in a recent research note previewing the quarter that the company was likely to meet or beat Wall Street estimates for the December quarter, but he worried that current expectations for the March quarter are too aggressive. He noted that historically, March-quarter sales have been down about 32% sequentially from the December quarter—but he points out that current Street models call for a more modest 25% drop. He thinks the total could be around $85 billion, well below the Street consensus.
Nonetheless, Daryanani maintained his Outperform rating and $210 target price on Apple shares, writing that the company “remains well positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.”
D.A. Davidson analyst Tom Forte likewise remained bullish headed into the quarter, although he recently wrote that his $175 price target is “under review” ahead of the earnings report. Forte sees three potential catalysts for Apple shares over the next 12 months: continued strong iPhone sales, driven by 5G; strong growth in newer product categories, in particular Apple Watch and Apple TV+; and accelerated stock repurchases and potential higher dividends.
Morgan Stanley analyst Katy Huberty wrote in a recent research note that she thought December-quarter results will be modestly ahead of current estimates, driven in particular by strong iPhone sales—her forecast was for $72.1 billion, way above the Street. In previewing the quarter, Huberty repeated her Overweight rating and $200 target on Apple shares, asserting that “revenue stability, upcoming product launches and expansion into new markets” makes Apple a defensive pick in a rising-interest-rate environment.
Write to Eric J. Savitz at [email protected]
Source: https://www.barrons.com/articles/apple-stock-price-earnings-iphone-51643231869?siteid=yhoof2&yptr=yahoo