Apple Inc.’s $89.5 billion in quarterly revenue is nothing to sneeze at, but it also illustrates some of the challenges of being a mature company.
Rosenblatt Securities analyst Barton Crockett likened Apple
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to “a massive battleship” in the wake of its Thursday afternoon earnings report, noting that despite management’s best attempts to move things along, Apple is “advancing only a little.” Revenue dipped in the latest quarter relative to a year before.
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“We admire Apple’s position as the maker of the world’s most important device, the iPhone,” Crockett wrote, in reiterating his neutral rating and cutting his price target to $189 from $198. “But, without disruptive new products, sales seem to be stuck in a muted place. And the next swing at big disruption, Vision Pro, starting next year, feels a like a slow build, initially.”
Tom Forte of DA Davidson also highlighted Apple’s tougher growth position, arguing that the iPhone won’t drive a “bailout” of overall December-quarter results.
“While cognizant of the fact that there is one fewer week in the December quarter than last year, we view management’s flat sales guidance as proof the company cannot rely on iPhone sales to drive shares higher, as it has in the past,” wrote Forte, who rates the stock at neutral with a $166 target.
While Apple’s management didn’t dwell too much on the economy, JPMorgan’s Samik Chatterjee said “the effects of the challenging macro were evident and were more profound on certain segments than imagined, and [are] likely to raise concerns around the sustainability of the growth if the macro effects were to continue.”
He flagged that hardware revenues trailed expectations during the September quarter, “with macro headwinds particularly apparent in Macs as well as Wearables, Home and Accessories.”
Further, Apple expects year-over-year growth in iPhone sales during the December quarter, but investors might be left with concerns “around the sustainability of the resilience once the product-cycle-led tailwinds for the iPhone 15 cycle moderate heading into calendar 2024,” according to Chatterjee.
Despite his concerns about the economy, Chatterjee continues to rate the stock at overweight, admittedly with a slightly lower price target of $225, down from $230 before the report. He noted that Apple has many “levers” to spark earnings growth, including “robust buybacks” and a greater mix of high-margin services revenue.
Read: Apple ‘investing quite a bit’ in generative AI, but its CEO is being tight-lipped
Apple continued to find a defender in Oppenheimer’s Martin Yang as well.
“Fears over iPhone losing share to Huawei near term in China seemed overblown,” he wrote. “Sales from Greater China slowed vs. June but still managed to grow [year-over-year] on a constant-currency basis. Additionally, iPad and Mac were dragging on growth while iPhone achieved a September quarter record in Mainland China. We expect investor concerns over China share loss to mostly dissolve heading into [fiscal 2024].”
He has an outperform rating and $200 target on the stock.
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