J.P. Morgan expects modest Apple Q2 upside from Macs and Services

With iPhone builds slowing down, analyst Samik Chatterjee believes investors are primed for softer results.

From a note to clients that landed on my desktop Wednesday:

The setup into the upcoming earnings print is dramatically different from the last one with the focus on near-term earning drivers having significantly moderated post the peak holiday sales quarter.

With feedback from the supply chain indicative of iPhone builds moderating, led by the softening trend for smartphone sales in China as well as slowing momentum of 5G iPhone sales, we believe investor expectations are primed for softer results relative to sell-side consensus.

We expect to see modest upside to investor expectations led by the momentum in Mac and iPad shipments — which investors are concerned will wear off in 2H21 with the moderation of WFH tailwinds, as well as strong growth in Services, while iPhone revenues track more in line with expectations.

Relative to guidance, investors are not expecting an explicit quantitative guidance from Apple, but instead are expecting the company to qualitatively guide to weaker seasonality of iPhone revenues relative to last year when the channel fill of iPhone SE contributed to results.

The combination of modest beats and low expectations creates a favorable setup into earnings, but the absence of material iPhone beats and the ~11% move in the stock already over the last month could limit material upside on sentiment from the print.

Maintains Overweight rating and $150 price target. 

My take: A modest, well-modulated note.


  1. Jerry Doyle said:
    “…. investors are primed for softer results.”

    I always seek daily one good deep belly chuckle. Already got it this early, so I may be lucky and get two or more today. 🙂 Investors are primed for stronger and solid results!

    April 14, 2021
  2. Jonny T said:
    PED, you are far too much the gentleman! It’s a pussyfooting, sitting on the fence take of someone unsure of where to step next.

    April 14, 2021
  3. Bart Yee said:
    Hmm. iPhones moderating (there’s that word again) vs. typical seasonality vs. pull-through of iPhone demand into Jan-Feb (evidence via China iPhone sales, maybe reflected into US, less in Europe, Rest of Asia) that positively impacts Services revenue (AppleCare, App Store, Search revenue) as a slightly lagging indicator. IMO, opening of education venues will still bode well for iPad and Mac sales as we have seen w/recent stats.

    IMO, iPhones will be ahead YOY given full quarter sales vs pandemic decline in latter half of 2020 Q2, same for iPad & Mac sales. Concomitant sales of AirPods, iPhone 12 accessories, Watch & HomePod Mini’s should bolster Wearables segment above YOY. Services should continue to grow YOY but at a rate slower than during Q1.

    As for “weaker seasonality of iPhone revenues relative to last year when the channel fill of iPhone SE contributed to results”, iPhone SE was intro’d April 15, available April 24th, so only contributed to 2 months sales plus the SE was literally only 50% of the ASP’s. No doubt of unit number sales, but contribution to iPhone revenue, while important, was less of a factor than continued strong iPhone 11 or current 12 sales. I think iPhone 12 revenue will hold up flat to ahead in Q3 and iPad/Mac sales, if new ones are introduced at Spring Forward will more than make up for iPhone SE bump comparison.

    April 14, 2021

Leave a Reply