Apple Earnings Release: A Clearing Event, Says Morgan Stanley
Summary: Ahead of Apple’s earnings release in February, analysts at Morgan Stanley believe that the event will serve as a clearing event for investors. They anticipate that this will allow investors to refocus on the FY25 ‘Edge AI’ opportunity and the resilience of Apple’s margins and services. With an Overweight rating and a $220 price target on Apple’s shares, the analysts are optimistic about the tech giant’s performance.
Morgan Stanley expects Apple to exceed the consensus revenue and earnings per share (EPS) estimates for the December quarter. The bank anticipates that the strong performance will be driven by iPhone and Services. They have now forecasted a revenue of $119 billion and an EPS of $2.13, which are 1-2% higher than Street expectations.
While Apple’s December quarter performance is expected to be strong, Morgan Stanley predicts a moderation in revenue guidance for the March quarter. The bank believes that the revenue guidance will be closer to their estimate of $93 billion, compared to the consensus estimate of $96 billion. The analysts also anticipate an EPS of $1.54 for the March quarter.
The recent outperformance of Apple’s shares, with only 2% off all-time highs, can be attributed to excitement around the company’s opportunity in ‘Edge AI’. Morgan Stanley highlights that the market is optimistic about Apple’s progress in this area, as well as its gross margin and Services resilience.
Morgan Stanley emphasizes several key metrics to watch out for in Apple’s earnings release. These include total revenue, Services growth, gross margin, China revenue, and Apple’s updated disclosures about device and iPhone installed base. These figures will provide valuable insights into the performance and outlook of the tech giant.
*Disclaimer: This article is based on analysts’ opinions and should not be taken as financial advice.
Analyst comment
Positive news. Morgan Stanley expects strong performance for Apple in the December quarter, with revenue and EPS estimates higher than Street expectations. However, they predict a moderation in revenue guidance for the March quarter. Excitement around Apple’s ‘Edge AI’ opportunity and key metrics to watch out for in the earnings release provide optimism for the tech giant’s performance.
