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Apple's 4th-quarter earnings will provide an early look at iPhone 11 sales. Here's what 5 analysts are saying ahead of the report.
Apple's 4th-quarter earnings will provide an early look at iPhone 11 sales. Here's what 5 analysts are saying ahead of the report.
Daniel StraussOct 30, 2019, 18:30 IST
Apple
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Apple's fiscal fourth-quarter earnings - set to be released Wednesday after the closing bell - will provide the first sign of how the company's new iPhone models are selling.
The report will include 10 days' worth of iPhone 11 sales, and investors and analysts will also be looking for guidance around the upcoming holiday season.
This will be the last quarter of results before Apple steps into the streaming wars with Apple TV Plus, which is scheduled be to released this Friday.
Here's what five Wall Street analysts are saying ahead of Apple's earnings report.
Apple is scheduled to report fiscal fourth-quarter earnings after the market closes Wednesday.
The results will include 10 days' worth of sales for iPhone 11 models, providing the first look at how the new slate of devices is selling. The iPhones were released for sale on September 20 and the company's quarter ended on September 30.
Investors and analysts will also be watching closely for any guidance given on iPhone sales for the upcoming holiday season.
The tech giant's shares climbed to an all-time high last week amid reports of stronger-than-expected iPhone 11 demand, lifting Apple's market capitalization back above $1 trillion and making it the most valuable public company in the world.
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Apple also reportedly asked suppliers earlier this month to increase production by up to 10%, or 8 million units.
Wednesday's results will also be the last before Apple begins offering its video streaming platform Apple TV Plus. The service is scheduled to be released Friday and it reflects the company's continued push into services to diversify revenue.
The iPhone maker is still embroiled in the trade war between the US and China. Some of its products including iPads and iPhones could get hit with 15% tariffs in December if a trade truce isn't reached. Investors will likely be looking out on the conference call for comments by CEO Tim Cook regarding the effect of the trade dispute on Apple's sales and profit.
Wall Street is expecting Apple to post $12.88 billion in profit on about $63 billion in revenue for the fiscal fourth quarter. The company reported about $14.1 billion in profit and $62.9 billion in sales during the same period last year.
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Shares of Apple are up more than 54.5% year-to-date. The stock has 25 "buy" ratings, 17 "hold" ratings, and six "sell" ratings.
Here's what Wall Street is talking about leading up to Apple's fourth-quarter results:
Wedbush: "The Street will be focused on iPhone 11 demand."
Price target: $265
Rating: Outperform
"From multiple checks our TMT team has picked up that overall iPhone 11 demand is trending 'much better' than expected which further confirms our iPhone units forecast of 185 million for FY20 is very hittable," Wedbush analyst Daniel Ives wrote in a note to clients Tuesday.
Ives added: "The Street will be focused on iPhone 11 demand with all eyes on Apple's guidance for the December quarter."
Morgan Stanley: "We estimate Apple TV+ can become a $9B revenue business with 136M paid subscribers by FY25."
Price target: Raised to $289, from $247
Rating: Overweight
"With an attractive price point at $4.99/month, and wide initial distribution to the Apple installed base via the bundled free year offer, we estimate Apple TV+ can become a $9B revenue business with 136M paid subscribers by FY25," Morgan Stanley analysts wrote in a note to clients October 22.
UBS: "We increase our revenue estimate slightly to $63.1bn from $62.7bn mainly due to iPhones."
Price target: Increased to $275, from $235
Rating: Buy
"iPhone 11 demand is higher than expected driven by several factors including a better trade-in program from Apple, a more attractive price-point for the base model, the largest mix of phones in the install base (iPhone 7) is three generations old, services bundle with hardware, and lesser FX impact," UBS wrote in a note to clients October 24.
They added: "For the September quarter, we increase our revenue estimate slightly to $63.1bn from $62.7bn mainly due to iPhones."
Bank of America: "We reiterate Buy on services reacceleration, 5G tailwinds and strong capital return."
Price target: Bumped to $260, from $250
Rating: Buy
"Our BofAML Apple indicator increased to 5.25% in C3Q from 2.49% in C2Q, and indicates strength for Apple's revenue growth in C4Q. YoY gross profit dollar growth is still accelerating into 2020, which is correlated to stock price," analysts at Bank of America Merrill Lynch wrote in a note to clients Monday.
The analysts added: "We reiterate Buy on services reacceleration, 5G tailwinds and strong capital return."
JPMorgan: "We are not recommending investors add incremental positions heading into the print."
Price target: Lifted to $275, from $265
Rating: Overweight
"Shares are now trading at 19.5x NTM EPS which is above its long-term average of 15.4x, and higher than the typical earnings multiple that investors are willing to attribute to the shares unless they receive reinforcement of the upside to consensus earnings when Apple reports," JPMorgan wrote in a note to clients Monday.
The analysts added: "We are not recommending investors add incremental positions heading into the print, but rather use any share price weakness following the print to double down on the multi-year earnings trajectory."
