Get ready – It’s almost time for the biggest companies in tech to make their move. Tomorrow, after the market closes, Apple (NASDAQ:AAPL) The company plans to report earnings for its fiscal fourth quarter (September quarter).
Barclays’ Tim Long, an analyst ranked in the top 3% of Street experts, sees reasons for caution despite some positive factors.
Several favorable factors are at play, including strong late-cycle iPhone 15 performance, improved services growth, and easing currency headwinds, which could partially offset weaker MacBook revenue. This could lead to “flat to slightly improved” results in the September quarter.
On the positive side, iPhone earnings could be surprising as inventory buildup could push shipments beyond the expected 51 million units. Meanwhile, services growth is expected to be 13-14% year over year, slightly above the consensus estimate of around 13%.
But Long believes the focus is elsewhere: “This is the first full quarter of IP16 shipments, so we think the 12-Q guidance is the main event.”
And here, Long is taking a cautious stance, given the mixed data points for the iPhone 16 and the “increased news flow regarding build revisions.” Long, who recently reported on semiconductor production cuts, said he has heard that companies further down the supply chain are also “lowering their production expectations.” Recent sell-through checks have shown “slight improvement” but still indicate flat or declining performance compared to last year. It has long been estimated that wafer cuts and a potential push to 2025 could reduce total manufacturing by up to 10%, and Apple initially announced that the iPhone 16 would be lower after the AI event in June. is believed to have had a more optimistic outlook on sales numbers. However, actual sales appear to have been weaker than expected.
He continued, “We believe there is greater downside risk than upside risk to the 12-Q forecast of 79 million units.” “Due to the economic downturn and cuts, shipments in the March and June quarters may also decline.”
Meanwhile, Apple Intelligence was just released to US users in iOS18.1, but some highly anticipated features, including Genmoji and ChatGPT integration, won’t be released until December. Additionally, the new Siri engine and expanded non-English language support won’t be released until March 2025 at the earliest. “Therefore,” says the five-star analyst. “Due to language availability and third-party app limitations due to Apple Intelligence API adoption, AI capabilities on mobile phones will likely be limited for some time.”
In conclusion, we are underweight (i.e. sell) Apple stock at long rates, with a price target of $186. This suggests the stock could fall 19% in the coming months. (Click here to see Long’s track record)
While this is a negative view, only one other analyst joins Long in the AAPL bearish camp. There are also 23 Buys and 8 Holds, giving the stock a Moderate Buy consensus rating. If the average target of $247.32 is achieved, the stock price will change at a premium of about 6% after one year. (look Apple stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
