Apple to beat market (again), Morgan Stanley predicts
Photo by Zac Durant on Unsplash
Bolstered by services income and stronger than predicted iPhone sales thanks to better than anticipated production, Apple is likely to beat market predictions in Q1 22, says Morgan Stanley analyst, Katy Huberty.
Apple beats the market (again)?
While we don’t and can’t know yet if the analyst has this right, she makes a string of interesting predictions relating to AAPL performance in the quarter in her latest client note. One highlight being that she expects services to hit $19.2 billion in the quarter, up 21% year-on-year and 3% higher than estimates. She thinks better than expected App Store sales will have boosted performance.
The analyst also points out that Morgan Stanley’s own Phone lead time tracker identified that the average lead time for the iPhone 13 Pro and Pro Max fell from 29 days at the beginning of the December quarter to 2-3 days by year end
The note makes numerous observations, most of which tally well with reports I’ve been watching in recent weeks.
According to Huberty:
- Apple will achieve $118.2 billion in revenue overall, she predicts.
- She notes Apple’s strong performance in China.
- She observes that while component shortages may have dampened results, Apple still led smartphone shipments globally on strength of demand.
- Around 83 million iPhone sales in the quarter.
Apple had a great reaction in China
- An installed base of 1.65 billion loyal users.
- 50-75% of iPad, Mac and Apple Watch purchases came from new customers in 2021.
- Anticipates a “relatively in-line March quarter” on the back of improving iPhone production and services outperformance.
What about the Mac?
The analyst told clients: “Preliminary IDC results… indicate Apple shipped 7.6M units in the quarter, 3% ahead of our 7.4M December quarter estimate, where we are 2% ahead of consensus Mac revenue ($9.6B vs. $9.4B).”
[Also read: Jamf data hints Apple enterprise business is booming]
iPad shipments were down 22 percent year on year, Huberty’s estimates claim.
Moving forward, Huberty points out that with the iPhone S3 in April/May (as anticipated), iPhone 14 in fall and next year’s mixed reality headset on the charts, she thinks Apple will do what historically it always does and outperform ahead of new product cycles.
Positive predictions for Jan 27 fiscal call
The analyst expects Apple to announce $122.3 billion of total revenue, 41.9% gross margin, and $1.97 of EPS (vs. consensus of $118.3B, 40.5%, and $1.89, respectively). She also predicts 55 million iPhone sales in the March quarter, with the following 13-weeks set to be boosted by iPhone SE 3 – and says continued COVID challenges mean Apple management probably won’t share revenue guidance for the coming quarter.
We’ll find out how much of this is true on Jan 27 when Apple reports its results.
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