Why an indie Apple analyst with a stellar track record is betting so high on Q3

Neil Cybart’s $80.37 billion revenue number tops anything I’ve seen outside Estimize.

From “My Q321 Apple Financial Estimates” ($) posted Monday to Above Avalon subscribers.

My revenue ($80.4B) and EPS ($1.19) estimates are notably above consensus. This implies my expectation is for Apple to report a comfortable “beat” to consensus on Wednesday.

Last quarter, Apple completely blew consensus numbers out of the water. While Apple did not provide revenue guidance for 3Q21, management did provide the following financial clues:
3Q21 revenue will grow strong double digits year-over-year.

    • The sequential revenue decline from 2Q21 to 3Q21 will be greater than in prior years due to 2Q21 being strong for iPhone and a supply constraint headwind of $3B to $4B in 3Q21.
    • Gross margin will be between 41.5% and 42.5%.
    • OpEx will be between $11.1 billion and $11.3 billion.
    • OI&E will be around $50 million.
    • Tax rate will be around 14.5%.

My estimates are a bit stronger than what was implied by the preceding clues, but not by much.

Below: Cybart’s estimates to two digits…

Total revenue: $80.37 Billion
EPS: $1.19
Revenue by segment:
iPhone: $35.48B
iPad: $10.67B
Mac: $10.02B
Services: $16.71B
Wearables / Home / Accessories: $7.49B
Gross margin on total revenue: 42.66%

My take: Cybart is usually among the 10 best analysts in my quarterly Earnings Smackdown and has nailed more than one quarter with pinpoint accuracy (Q2 2017 and Q1 2019 come to mind).

UPDATE: Friend of the blog Bartley Yee came in this morning with a last-minute revenue estimate of $82.21 billion, topping Cybart by nearly $2.billion. Yee has had his share of accurate estimates. Too late (and I’m too lazy) to recast the headline.

16 Comments

  1. Patrick Beyrouti said:
    If revenues reach $80 billion, it means demand generation was not needed and hence marginal expenses to get more revenues really low , so the beat in EPS will be higher , perhaps $ 1.25+

    3
    July 27, 2021
    • Gregg Thurman said:
      Thought I posted it last night, but can’t find it now. Anyway in yesterday’s After Hours I saw a block trade go through at $153.4455. Made my heart go all a Twitter.

      0
      July 27, 2021
  2. Eric Lambeth said:
    Everyone’s expectations are getting a bit frothy. That’s often when we see a post earnings sell off. Just saying. Hope I am completely wrong
    Ericinaustin

    0
    July 27, 2021
    • Bart Yee said:
      @Eric I don’t disagree with your thinking. The really interesting thing, and maybe because of no guidance, is we are not hearing about those “whisper” numbers that were famously bandied about in years and quarters past. Every analyst now has to (at least look like) do their research and due diligence to come up with and justify their own numbers without primary help from Apple.

      Even with recent blowouts of any whisper numbers, Apple could not get respect or sometimes even recognition that it was doing so well, instead always bumping up against those tired refrains and tropes of:
      1) next quarters will be tough compares

      2) Apple’s too big to keep moving like a start up

      3) next hardware updates will be incremental and lacking innovation leading to flat or slowing sales and revenue.

      4) Apple products are too expensive, and not good enough compared to the competition.

      5) Apple is wasting money on buybacks – they should raise the dividend by 150%, declare a special dividend, and go on a massive M&A buying spree to prop up its earnings and profits.

      6) and for some analysts – “I just don’t get Apple, by all rights Apple should be doomed.”

      2
      July 27, 2021
    • Bart Yee said:
      Whether or not there is a selloff is really immaterial, many will look to take profits (as is happening now in the market) buying the rumors and selling the news, some will rebalance, and others will just rotate away from AAPL looking forward the next quick profit trade. IMO, that’s actually healthy for AAPL stock because someone else and Apple get to do something with the sold stock.

      We will see in an hour whether some of us are frothy, bubbly, bobbing on the surface, or still underwater.

      0
      July 27, 2021
    • Kirk DeBernardi said:
      @ Eric Lambeth —

      “It’s like déjà vu all over again.”
      — Yogi Berra

      2
      July 28, 2021
  3. Gregg Thurman said:
    CNBC’s big revelation yesterday about July 30 $155 Call volume turned to be a big meh.

    On volume of 112,000 contracts traded only ~4,000 new contracts were added to Open Interest. That means that the other 108,000 contracts traded were nothing more than churn (brokers churning commissions? Wouldn’t surprise me).

    The $150 Calls added more new contracts on less volume.

    Yesterday’s
    OPEN INTEREST
    July 30 $150 Call 76,461
    July 30 $155 Call 67,709

    VOLUME
    July 30 $150 Call 111,459
    July 30 $155 Call 112,257

    Looks like today will be repeat of yesterday.

    0
    July 27, 2021
  4. Gary Morton said:
    I hope Niel or Bartley Lee nail the numbers. It would mean that Apple did an incredible job of addressing the supply shortages for macs and iPads. Also that the first pandemic vs. pandemic compares are stronger than most expect.

    2
    July 27, 2021
  5. bas flik said:
    in this market where chinese government crush and destroy their own companies 150 is far way. hopefully Joe B. will not imitate his colleague in China. strange things happening in the orient. With this untrustworthy behaviour you will never become a world leader.

    2
    July 27, 2021
    • Horace Dediu said:
      Investors should be contemplating the second C in CCP.

      3
      July 27, 2021
    • Lalit Jagtap said:
      China is following “communist” governance model. So I do not see anything wrong in actions of the Chineses governments. As a part owner of AAPL, I trust Mr Cook, as he knows how to serve the Chinese markets.

      1
      July 27, 2021
  6. Bart Yee said:
    PED and all, Neil’s track record is much longer than mine and he predicted some quarters that were much much tougher to discern so good reason to highlight his thinking and methodology. Neil’s blog is another very good resource for Apple fans and investors.

    I hope his estimates and my estimates are closer to true and that Apple confounds everyone with a profound upside beat.

    3
    July 27, 2021
  7. David Drinkwater said:
    And even Cybart’s lofty guesstimate was $1billion short!

    Unbelievable. Apple is absolutely crushing it, and yet AAPL gets crushed. It makes no sense to me, but Apple has a new ten weeks to grow into its true value before market shenanigans strike again.

    5
    July 27, 2021

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