Some of Wall Street’s biggest names have been stepping up to the earnings plate and none come bigger than Apple (AAPL). The tech giant will report 1QFY22 results on Thursday after the close, and Evercore analyst Amit Daryanani expects the company to meet consensus estimates.
However, as has been de rigueur, what investors will be keen to find out is what does the company expect from 2022. And here, Daryanani has a more measured take on what lies ahead.
“Fundamentally, we continue to think AAPL remains a core mega-cap to own and they are well positioned into H2:22 with several key product launches,” the 5-star analyst said. “Near-term, we think the risk is that estimates take a bit of a pause as Street models for March/June appear to imply a better than seasonal pattern.”
Present Street models, says Daryanani, are “underappreciating the typical seasonality” the March quarter usually offers. For example, March quarter sales usually drop by 32% sequentially but Street models currently factor in a more accommodating 25% quarter-over-quarter decline. Daryanani’s expectations are also more bullish than the 5-year average, expecting revenue in the $85 billion region, which suggests a 28% drop and accounts for “some contribution from iPhone SE3 in the month of March.”
In addition to the anticipated launch of the SE3 model, the key item to look out for will be the ever-important iPhone outlook. Daryanani notes there have been “some signs Chinese share gains may have slowed.” According to China smartphone data, throughout the quarter there was a notable deceleration in sales, from +88% in October down to +10 in November and turning into negative territory with a -15% decline in December.
Nevertheless, near-term caution aside, Daryanani thinks Apple remains “well positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.”
As such, the analyst rates Apple shares an Outperform (i.e. Buy) along with a $210 price target. The implication for investors? Potential upside of ~31%. (To watch Daryanani’s track record, click here)
The rest of the Street has a more modest outlook here, with the $181.40 average target implying shares will gain 13.5% over the coming months. On the rating front, most analysts remain firmly in Apple’s corner; the stock has a Strong Buy consensus rating based on 22 Buys, 4 Holds and 1 Sell. (See Apple stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
