Apple announces earnings on Wednesday. Here’s what to expect.

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Expectations for Apple’s earnings have steadily increased.

Don Emmert / AFP via Getty Images

Apple

he is heading towards financial results for the December quarter with his shares at an all-time high. Expectations for Wall Street have steadily increased, with hopes particularly high for iPhone sales after the company kicked off initial sales of the iPhone 12 line in the middle of the quarter.

The Street also has high hopes for MacBook sales, driven by the debut of the first laptops powered by Apple-designed processors and a steady wind from the pandemic-driven work-from-home trend. Throw in expectations for continued strong demand for iPads, wearables, and services, and you’ve got the recipe for a strong quarter.

The only question is whether expectations have gone too far.

Apple (ticker: AAPL) did not provide guidance for the quarter, which adds an element of volatility to this report. The street consensus calls for $ 102.8 billion in revenue and $ 1.40 per share profits. For the seasonally softer March quarter, the street sees $ 78.9 billion in revenue and profits of 90 cents a share.

Street Consensus estimates found by FactSet forecast an increase in iPhone revenues of 6.4%, to $ 59.6 billion, with double-digit growth in all other categories. The consensus sees iPad sales at $ 7.4 billion, up 23.4%; Mac sales of $ 8.6 billion, up 20.4%; wearable device sales of $ 11.5 billion, up 14.8%; and services revenue of $ 15.2 billion, up 19.3%.

Investors will also be keen to see if the company resumes providing earnings indications.

Cowen analyst Krish Sankar repeated his Outperform rating on Apple on Friday, raising its price target to $ 153, from $ 133. Sankar expects the company to exceed expectations for the quarter on both highs and profits. , driven in particular by strong demand for the iPhone. It is projecting $ 104.5 billion in revenue and profits of $ 1.46 per share. The analyst estimates that Apple sold 77 million iPhones in the quarter, up 97% sequentially and 7% year-over-year. It sees iPhone revenue of $ 60.1 billion, up 7% from a year ago, with service revenue up 26% to $ 16 billion. Apple remains Sankar’s first choice in the IT hardware industry.

Morgan Stanley analyst Katy Huberty last week reiterated her overweight assessment on Apple stock by raising her price target to $ 152 from $ 144. He writes that his audits found that Apple saw strength in its product and service portfolio in the quarter, driven by iPhone 5G adoption, the work and learning from home trend, and constant engagement with the App Store.

“We are buyers ahead of what we expect will be a record for the December quarter,” Huberty wrote in a research note. “Our recent conversations suggest that investors expect Apple to deliver solid, but not exceptional, December quarter results. We disagree and believe Apple can report record quarterly revenue and earnings. “

Huberty expects double-digit revenue growth across all revenue segments, with “upside risks” for iPhone, Mac and services. Its revenue estimate for the quarter is $ 108.2 billion, well above the consensus of $ 102.6 billion. He sees earnings for the December quarter of $ 1.50 per share, above Street at $ 1.40.

Huberty thinks the iPhone 12 has been Apple’s most successful product launch for the past five years. It expects 78 million iPhones shipped in the quarter at an average selling price of $ 825, with revenue growth of 14% to $ 63.9 billion, double the growth rate currently predicted by Street’s consensus for iPhone revenue. .

Loop Capital analyst Ananda Baruah recently repeated his Buy rating, increasing his target price to $ 155 from $ 131. Baruah wrote in a research note that he expects a “really big year” for Apple and thinks that the signs should be clear with the next earnings report. Baruah thinks there could be a material upside in house numbers for both the short term and the full 2021 calendar, driven by the strength of both iPhones and Macs. Baruah also believes the company could see the benefit of healthy iPad growth. AirPods, Watch and Services.

Evercore ISI analyst Amit Daryanani recently repeated his Outperform rating on Apple stock, raising his price target on the stock to $ 145 from $ 135. Daryanani indicated a combination of better-than-expected unit demand and average selling prices higher than expected, as consumer demand leans towards the high-end Pro and Pro Max versions of the new phone line. He also noted “better service growth” given more than 30% growth in downloads from the App Store.

Apple stock closed Monday at a record $ 142.92. After rallying 82% last year, the stock has risen as much as 8% so far in 2021.

Write to Eric J. Savitz at eric.savitz@barrons.com

Through: www.barrons.com

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