Q1 Beat Likely: Ives anticipates a first-quarter beat, considering the prevailing pessimistic sentiments. The negative narrative surrounding Apple has grown over the past year due to a lack of iPhone unit growth, causing many investors to question Cupertino’s future growth story, notes the analyst.
Key Items Of Interest: Ives points out that Wall Street will likely focus on iPhone revenue and the Services segment’s performance. Both are expected to have fared well during the December quarter, with consensus estimates for iPhone and Services revenue at $68 billion and $23 billion, respectively.
On theearnings call investors may pay attention to commentary on the crucial China region, which constitutes about 20% of iPhone unit sales. “While Huawei is clearly a headwind in China and some of the geopolitical swirls, so far iPhone demand has been stable in China,” the analyst said.
He sees potential strength in the high-end segment due to upgrade opportunities, offsetting weaknesses in the third-party retail channel.
Around 100 million iPhones in China are in the window for an upgrade opportunity, countering competitive pressures from Huawei in mainland China, says Ives.
2024 Outlook: Contrary to some Wall Street estimates, Ives expects iPhone units to rise slightly in fiscal year 2024. The average selling price, currently around $925, is likely to increase as customers lean towards the Pro/Pro Max models.
“With Services revenue back to steady double-digit growth and iPhone units that should be in the ~220 million range for FY24 we believe the ‘growth demise story’ of Apple being spun by bears is a dynamic we have seen constantly over the past decade and this is just another chapter in that book,” Ives said.
Apple last year grabbed the crown of the world’s biggest smartphone maker, comfortably beating Samsung to the punch and ending its 13-year reign at the top.
Strong Vision Pro Preorders: Ives predicts Apple will sell over 600,000 Vision Pro headsets in 2024, driven by robust preorder trends. “The demand…