Evercore: Upbeat preview of Apple’s results despite estimated -2% growth

From a note to clients by analyst Amit Daryanani that landed on my desktop Sunday:

AAPL is coming off its first double-digit revenue growth quarter since 2018 and many of the tailwinds that enabled a robust beat in the June-qtr should have sustained through the Sept-qtr. The delayed iPhone launch makes it unlikely Apple will report y/y growth this quarter (we are modeling -2%), but we still see upside to consensus numbers.

Macbook and iPad likely sustained high demand through the quarter driven by work/learn from home trends. Notably, PC/Tablet market forecasts have become more positive over the past 8 weeks, which should help sustain strong Mac/iPad growth. App Store has also been very strong with revenue up 25% in the Sept-qtr, but there will likely be some negative offsets with AppleCare.

We expect Dec-qtr momentum to be driven by the iPhone launch (Oct 13) and would look for both revenue and margin implications from the new launches.

Net/Net: Apple is well positioned to deliver upside to Sept-qtr results and we expect focus to remain on FY21 commentary given expectations for a very strong 5G iPhone cycle.

Maintains Outperform rating and $135 target.

My take: Once again, it’s all about the guidance.

2 Comments

  1. Robert Paul Leitao said:
    Wearables and Services are Apple’s double-digit growth revenue segments. There is some correlation between the sales of new iPhones and Services revenue activity. Looking beyond the new iPhones, the metric that’s most important to me is Average Revenue Per User (ARPU). I expect ARPU to continue to rise with a “turbo charged” infusion of revenue from the release of the first 5G iPhones and the release of Apple One. Apple’s attractive pricing on the current Apple Watch models – excellent price/performance value propositions – will deliver fast growth to the Wearables segment in the first six months of the current fiscal year.

    2
    October 11, 2020
  2. Dan Scropos said:
    There is a 0% chance that Apple reports negative YoY growth. Wasn’t Q4 revenue $64 billion last year? They won’t come in a penny below $66 billion and will possibly touch $70 billion. RPL lays out the strongest growth segments.

    2
    October 11, 2020

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