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Apple reports second-quarter earnings on Thursday.
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Investors will be looking for updates on Chinese iPhone demand.
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The company’s stock is down 12% in 2024, trailing the S&P 500.
Apple will report fiscal second-quarter earnings on Thursday after the closing bell.
Analysts are dialed in on Apple’s iPhone business in China, which has faced a surge in competition over the past year, as well as its capital return plans and guidance as it prepares to release its next-generation iPhone later this year.
Apple’s stock was down 12% year-to-date through Wednesday’s close, trailing the the S&P 500‘s 5% gain.
Barclays expects weak iPhone sales
Channel checks at Barclays suggest “slightly better” iPad and Mac revenues will help offset weak iPhone revenue, according to a recent note.
The firm said Wall Street estimates for Apple are too high, with analysts underestimating the ongoing weakness in China.
“Our latest checks also indicate iPhone 15 sell-through in China continues to show DD declines on a Y/Y basis over the last few weeks, after being down 20% in C1Q, with a higher mix of the base models, leading to negative mix shift and margin headwinds, with likely ASP declines on a Y/Y basis,” Barclays said.
Barclays also said the AI-capable iPhone 16 won’t deliver the growth that some investors expect.
“We don’t expect iPhone 16 to have significant design changes, and any differentiated GenAI applications with the iPhones will likely not launch until 2025 at the earliest. The initial build plan for iPhone 16 is expected to be in low 80Ms range, implying flattish unit growth Y/Y,” Barclays said.
Barclays rates Apple at “Underweight” with a $158 price target.
JPMorgan expects short-term headwinds in iPhone sales will give way to AI tailwinds
Low expectations heading into Apple’s second-quarter earnings release are warranted, according to JPMorgan, but the “cyclical headwinds” could soon turn into “AI tailwinds,” according to a recent note.
“The upcoming earnings print will still matter for investors in offering insights into the magnitude of the cyclical challenges on account of pressured consumer spending as well as the headwinds in relation to market share moderation in China,” JPMorgan said.
The bank said investor expectations might be so low that a slight miss from Apple could spark a turnaround in the stock price as the results turn out better than feared.
JPMorgan said that based on the latest demand trends, it expects Apple to report a modest revenue miss in the quarter, as well as a “more significant” miss to revenues when it reports third-quarter revenue guidance.
JPMorgan rates Apple at “Overweight” with a $210 price target.
Apple’s consensus second-quarter revenue estimate is $90.33 billion.
2nd quarter
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Revenue estimate: $90.33 billion
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Products revenue estimate: $66.95 billion
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iPhone revenue estimate: $45.76 billion
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Mac revenue estimate: $6.79 billion
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iPad revenue estimate: $5.91 billion
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Wearables, home and accessories estimate: $8.29 billion
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Service revenue estimate: $23.28 billion
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Greater China rev. estimate: $15.87 billion
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EPS estimate: $1.50
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Operating cash flow estimate: $22.87 billion
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Total operating expenses estimate: $14.33 billion
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Gross margin estimate: $42.01 billion
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Cash and cash equivalents estimate: $36.83 billion
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Cost of sales estimate: $48.52 billion
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Total current assets estimate: $142.22 billion
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Total current liabilities estimate: $116.82 billion
Source: Bloomberg
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