Wall Street consensus on Apple Q3 performance ‘conservative,’ says analyst
Investment bank Wedbush believes that an iPhone “supercycle” and Apple’s services will lead to another major earnings beat when the Cupertino tech giant reports its Q3 2021 quarterly results.
In a note to investors seen by AppleInsider, Wedbush analyst Daniel Ives says he expects Apple’s June quarter fiscal results to “be another beat across the board.”
“The Street is looking for $73 billion and $1.00 of earnings, both of which look likely conservative given the underlying iPhone strength we saw during the quarter with a particular uptick in demand out of China,” Ives writes.
He notes that supply chain issues and shortage of components was an overhang for Apple during the quarter, which is likely what prompted Wall Street’s conservative forecast. Ives, on the other hand, believes that the iPhone and Services neutralized any weakness that analysts were anticipating.
Ives also reports recent Asia supply checks carried out by Wedbush, which indicate that iPhone builds for the second half of 2021 are in the 130 million to 150 million range. The upcoming “iPhone 13” represents about 35% to 45% of those builds in the third quarter.
Current build numbers for the “iPhone 13” are in the 90 million to 10 million range, which would represent a 15% year-over-year shipment increase over the iPhone 12 out of the gates.
“While this number will clearly move around over the coming months (chip shortage volatility adds to it), we believe this speaks to an increased confidence with Cook & Co. that this 5G driven product cycle will extend well into 2022 and should also benefit from a post vaccine consumer “reopening environment,” Ives writes.
The analyst believes that the “iPhone 13” will sport a 1TB storage option and enhancements to LiDAR across the range.
“In a nutshell on the iPhone front, we believe the robust consumer product cycle continues globally for Cook & Co. especially with today roughly 250 million of the current 975 million iPhones not upgrading their smartphones in over 3.5 years based on our analysis, speaking to massive pent up demand within Apple’s installed base,” the analyst said.
Apple remains one of Wedbush’s favorite tech names, and Ives continues to forecast that Apple will hit a $3 trillion market capitalization in 2022.
Ives maintains his Outperform rating for Apple and his 12-month price target of $185. The target is a sum-of-the-parts valuation based on Wedbush’s 2022 estimates, and includes a 16x multiple applied to Services at $1.3 trillion and a 7x multiple applied to the rest of Apple’s hardware ecosystem at $2.1 trillion.
via AppleInsider News https://ift.tt/3dGGYcl
July 21, 2021 at 07:05AM