Apple, Inc.'s
The Apple Analyst: Laura Martin maintained a Buy rating and $220 price target for Apple stock, which implied an upside potential of over 27% from current levels.
The Apple Thesis: Citing channel checks, Martin reduced her estimates for Apple's fiscal year 2024 second-quarter estimates, the analyst said in a note. The checks revealed lower iPhone sales and weakness in China, offset by slightly higher than previously expected iPad and Mac revenue, she said.
Needham now estimates second-quarter sales of $90.8 billion, marking a 4% year-over-year drop, and operating income before depreciation and amortization, of $31.1 billion, flat with the previous year. The firm said it reduced its earnings per share estimate by 7% to $1.51.
The consensus estimates call for earnings per share of $1.51 and revenue of $90.516, according to Benzinga Pro data.
Martin also said Needham's product revenue estimate for the quarter was taken down by 6% to $67.6 billion, marking a 9% year-over-year drop. The services segment revenue estimates were left unchanged at $23.3 billion, marking an 11% growth from a year ago.
"AAPL's anemic and/or negative growth outlook, along with expected cost increases to fund
GenAI, are the biggest gating factors preventing new investors from buying AAPL, based on our
conversations," Martin said.
The analyst's estimates for the product categories are as follows:
- iPhone: $46.6 billion: down 9% year-over-year and 9% below the firm's previous estimate, with unit sales expected at 51.8 million
- iPad: $5.9 billion, down 12% year-over-year and 4% above the firm's previous estimate, with unit sales of about 11.7 million
- Macs: $6.8 billion, down 5% year-over-year and 6% above the firm's previous estimate, with unit sales at about 7.15 million.
- Wearables, Home and Accessories: $8.2 billion, down 6% year-over-year and unchanged from the previous estimate.
Apple Price Action: In premarket trading, Apple shares edged down 0.03% to $172.63, according to Benzinga Pro data.
