“We are buyers ahead of what we expect to be a record December quarter print.” — Analyst Katy Huberty
From a note to clients that landed on my desktop late Wednesday:
Our recent conversations suggest investors expect Apple to release solid, but not great, December quarter results. We disagree and believe that Apple is likely to report all-time record quarterly revenue and earnings.
Our checks point to strength across Apple’s entire Product and Services portfolio, and we model double digit Y/Y growth for all 5 revenue segments in the December quarter, with risk skewed to the upside for iPhone, Mac and Services.
Overall, our December quarter revenue of $108.2B is 5% above consensus (we are ahead of consensus in every segment but Services), while our EPS of $1.50 is 7% above consensus (Exhibit 1).
We expect demand strength to continue and our FY21 revenue and EPS estimates are both 5% above consensus. Given positioning into the quarter is muted after the rotation out of high quality stocks over the past several months, we expect strong follow through post-earnings and are buyers into the print.
Beyond the near term, we expect iPhone demand to remain strong throughout FY21, and forecast 220M iPhone shipments, 2% ahead of consensus estimates. March quarter iPhone builds of 50M (+39% Y/Y) already point to an above seasonal start to the calendar year, and Apple’s Taiwanese supply chain partners have just recorded 3 consecutive months of accelerating Y/Y sales growth (all of which were stronger than normal seasonal patterns), which we believe signals iPhone strength in the upcoming quarters
Maintains Overweight rating, raises price target $152 from $144. (Bull case $200, bear case $77.)
Cue Exhibit 1 (click to enlarge):
My take: Where Huberty goes, others will follow.