'To guide or not to guide; that is the question': Here's what 4 analysts expect when Apple reports quarterly earnings

Price Target: $370

Rating: Buy

Analysts at DA Davidson "remain cautiously optimistic ahead of earnings following our updates to our earnings model in February, which reflected the negative impact of the coronavirus on Apple's operating results," according to a note published April 23.

DA Davidson sees a number of challenges and opportunities the coronavirus pandemic has created for Apple:

"The challenges include: 1) the initial disruption to its sales to consumers in China and its China-dependent supply chain, 2) the global closure of its physical stores, and 3) the prospect of softening demand for its products because of global economic weakness as a result of the pandemic."

On the opposite end of the spectrum, the analysts said, "Apple's opportunities include: 1) increased demand for its products and services with consumers working and learning remotely, while sheltering in place, 2) its efforts to lean into healthcare (including a dedicated coronavirus app and contact tracing efforts), 3) its ability to acquire companies at attractive prices, and 4) a favorable set-up for its latest value-priced iPhone launch."

DA Davidson will be listening on the earnings call for any comments related to the implications of the pandemic, remote working and learning, 5G developments, Apple TV+, commentary around the recent launch of the budget iPhone SE, and Apple's ability to leverage and grow its services business.

Price Target: $310

Rating: Buy

Bank of America said in a note on April 27 that with such a tough environment, there is a wide range of expectations when it comes to Apple's upcoming earnings report.

Analysts at the bank said they think Apple will report second quarter figures that are well below consensus estimates, but they "remain confident on the long term trajectory of the business..." And they think the uncertainty of COVID-19 may affect guidance.

"Although AAPL could choose to not provide any guidance, we think AAPL could also provide a much wider than normal range to encapsulate the uncertainty of COVID-19," the analysts wrote.

For Apple services, the analysts said, "App Store data from Sensor Tower shows about 18% growth and given COVID-19 disruptions and Apple Store closures we model 15% growth for the Services businesses."

When it comes to capital allocation, BofA thinks Apple will make some moves, including authorizing a new stock buyback program and increasing its dividend:

"Every year, during the April earnings call, Apple announces a new buyback authorization and a dividend increase. We have already factored in a 10% dividend increase in our model. We expect Apple to announce a $50 billion - $75 billion new buyback authorization."

Price Target: $335

Rating: Overweight

JPMorgan analysts are bullish on Apple heading into its second quarter earnings report. The bank noted on April 27 that with Apple shares down by low single digits year-to-date, the stock has significantly outperformed the S&P 500, which declined -12%.

"We believe the outperformance has been led by: 1) investor positioning in high quality companies with strong quality of earnings, cash flow, and balance sheet, leading to protected dividends and buybacks; 2) investor positioning for macro recovery, where expectations for strong 5G-led iPhone volume cycle in 2021 remains high; and 3) greater investor confidence in the Services transformation than in previous cycles," JPMorgan said.

The firm added that given limited visibility on store operations, Apple refraining from issuing specific guidance for its fiscal third quarter should not come as a surprise to investors. It will also give Apple a chance to recalibrate expectations as it ramps into a recovery in the coming months and quarters.

"With concerns on near-term recalibration in consensus expectation, but strong long-term outlook, we would recommend investors look to add incremental positions following consensus recalibration after the print to participate in the 5G iPhone volume cycle and Services transformation upside."

Price Target: $236

Rating: Sell

Goldman Sachs has a negative rating for Apple, after downgrading the company to sell on April 17. Going into Thursday's report, Goldman thinks this quarter is "one of the most unpredictable and interesting earnings reports in Apple's history."

In an earnings preview note issued on April 24, Goldman said, "The company has faced unprecedented production stoppage due to the COVID-19 epidemic in China followed by likely rapid deterioration in demand with most of the rest of the world locked down in March."

"Another question for us is how much inventory Apple will want to carry exiting the June quarter given demand uncertainty in H2 compounded by the possibility that lockdowns have caused delays in new iPhones," analysts wrote.

Goldman also observed that this will be the first full quarter of impact from Apple TV+, and whatever the take rate is of Apple's free trial could have a big impact on future growth assumptions for Apple's services business.

"TV+ began as a service on November 1, 2019. We hope to get a better idea of what the free trial take rate has been in this quarter as that then would have a material impact on our services growth expectations this year - the lower the take rate the lower our growth forecast would be. We currently assume a relatively high take rate of 45%, but believe this is toward the optimistic end of what is possible."

Goldman expects services revenue growth of 18% to $13 billion in the second quarter.