As anticipation mounts in the tech industry ahead of a flurry of earnings releases this week, all eyes are eagerly awaiting Apple’s upcoming second fiscal quarter results, scheduled for Thursday, May 2nd. Investors and analysts alike are poised to dissect the performance of one of the world’s most influential and valuable companies.
Among those closely monitoring Apple’s quarterly report is Morgan Stanley analyst Erik Woodring, whose insights shed light on the expected trajectory of the tech giant’s financial performance. Woodring’s analysis suggests a familiar pattern in Apple’s earnings dynamics, characterized by a nuanced interplay between current results and future outlook.
Woodring anticipates a modest beat for the March quarter, driven by several factors. Notably, stable iPhone and iPad builds, marginal improvements in Mac shipments, and robust performance in services are expected to contribute to slight revenue upside. Woodring predicts revenue of $91.0 billion and earnings per share (EPS) of $1.51, slightly exceeding the Street’s consensus forecasts of $90.0 billion and $1.50, respectively.
However, the narrative shifts when it comes to projecting Apple’s performance for the June quarter. Here, Woodring diverges from consensus estimates, suggesting that market expectations may be overly optimistic. He foresees Apple guiding for revenue and EPS figures 4-7% below Street forecasts, reflecting a more conservative outlook. Woodring’s projections of $80.0 billion in revenue and $1.22 in EPS underscore a cautious stance amid uncertainties in the global economic landscape.
A key factor driving Woodring’s outlook is his assessment of iPhone sales, a pivotal revenue stream for Apple. While acknowledging the potential for upside in iPhone shipments due to recent build strength, Woodring remains cautious due to perceived weaknesses in global iPhone demand. His forecast of $35.6 billion in iPhone revenue and 39 million unit shipments falls below consensus estimates by 6% and 15%, respectively, reflecting a more tempered perspective on market dynamics.
Despite the anticipated post-earnings downturn in Apple’s stock price, Woodring advises investors to capitalize on any weakness, particularly in light of the company’s upcoming Worldwide Developers Conference (WWDC) on June 10th. With new AI software features expected to take center stage at the event, Woodring sees a buying opportunity for investors post-earnings, emphasizing the importance of adopting a long-term perspective amid short-term market fluctuations.
Woodring maintains an Overweight (Buy) rating on Apple shares, albeit with a slightly revised price target of $210 (down from $220), implying a 25% upside potential from current levels. While the Street’s average target is marginally lower at $200.71, the consensus sentiment remains moderately bullish, with a majority of analysts rating the stock as a Moderate Buy.
In summary, while Apple’s quarterly results may trigger a predictable market reaction, Woodring’s nuanced analysis underscores the company’s resilience and growth potential, particularly in anticipation of upcoming product developments and strategic initiatives. As investors brace for the earnings announcement, Woodring’s advice to “buy post-earnings weakness” encapsulates a prudent approach to navigating market volatility and capitalizing on long-term value opportunities.