From a note by analyst Amit Daryanani that landed on my desktop Sunday:
ALL YOU NEED TO KNOW: Apple should report relatively strong upside to the June-qtr, but COVID and manufacturing dynamics (floods in China regions where Foxconn sites are) could limit how much upside AAPL wants to flow into the Sept-qtr.
We are currently ~5% below consensus on our Sept-qtr outlook as we see potential headwinds from both the ongoing supply shortage as well as lapping some very strong comps in most product lines. Apple indicated supply would have a $3B- $4B impact in the June-qtr and we expect this headwind to accelerate in the Sept-qtr, as all signs seem to indicate the situation has gotten worse over the past three months.
iPhone revenue should once again come in strong y/y in the June-qtr given Apple only reached supply/demand balance for the product in March. Services growth will likely decelerate in June-qtr and potentially again in Sept-qtr given that we are lapping some tough App Store comps.
Over the long-term, we remain confident that the Services business can continue to grow at a high-teens rate. Mac and iPad will see the greatest impact from the supply shortage and they are also facing some very difficult COVID comps.
Net/net: Comps are getting tougher and there is some near-term uncertainty around iPhone guide for Sept-qtr. Despite near-term uncertainty, we remain confident Apple can continue to sustainably grow earnings in the high-teens. In addition, the headwinds we highlight appear to be relatively priced in given Apple has underperformed the S&P 500 by around 800bps YTD.
Maintains overweight rating and $175 target.
My take: What’s a little near-term uncertainty among friends.