Apple is slightly ahead of Wall Street’s expectations for the September quarter, which includes the launch of the iPhone 14, so analysts’ attention has begun to shift to the crucial holiday quarter. In a note to investors, investment bank Cowen gave its forecast for Apple to slightly beat Wall Street’s expectations for the September quarter and to be in line with market performance for the holiday quarter.
Cowen said Apple’s high-end iPhones were the main driver of its revenue growth. However, demand for the iPhone 14 Plus fell short of analysts’ expectations, which was described as a risk factor.
A report on 18 October said Apple had cut production of the iPhone 14 Plus, although this explanation is likely to be of questionable veracity based on only two supply chain sources.
Cowen predicts that Apple will ship 51 million iPhones in the third quarter, which is in line with forecasts from other industry analysts. Shipments in the fourth quarter are likely to be in the region of 80 million units. The analysts have slightly lowered their expectations for iPhone shipments in the December 2022 quarter and March 2023 quarter to 82 million and 55 million respectively, compared to previous forecasts of 83 million and 58 million.
iPad and Mac sales are expected to show double-digit year-over-year growth, with increased enterprise adoption of iPad likely to help offset lower consumer demand and Mac sales likely to show a +5% year-over-year increase in calendar year 2022.
Apple’s services business, including AppleCare, iCloud and others are expected to post +9% y/y growth in Q3. Cowen expects improvement in Q4, forecasting +11% y/y growth driven by increased App Store spending during the holiday season.
Cowen maintains its $200 price target on AAPL based on a 22x earnings multiple on Apple’s hardware business and a 39x multiple on recurring revenue from its services business, with an estimated blended 30x multiple of $6.65 per share on calendar year 2023 earnings.
AAPL stock has outperformed the Nasdaq by 12% and the S&P by 3% so far this year.
