Apple Inc.’s (AAPL.US) latest fourth-quarter earnings report and guidancehave sparked mixed reactions from analysts, with some highlighting positive aspects while others remain cautious.
Morgan Stanley maintained its Overweight rating on Applewith a $273 price target, citing both bullish and bearish signals. The firm noted that the September quarter results and December quarter guidance offered positive takeaways,including improved gross margins and accelerated services growth. However, the guidance also hinted at a production cut in the December quarter, leaving analysts divided on the company’s outlook.
Erik Woodring, lead analyst at Morgan Stanley, believes thatwhile the stock price may experience short-term volatility, the downside potential is limited. He emphasized that consumer response to Apple’s first-phase AI feature, Apple Intelligence, will be crucial for the December quarter’s performance.
Analysts further noted that Apple’s outlook for the first quarter of fiscal 2025 was mixed, with revenue slightly below Morgan Stanley/buy-side expectations but gross margins exceeding market consensus.
The first-quarter guidance suggests a 3-4 million unit reduction in iPhone production, confirming analysts’ predictions butstill anticipating flat iPhone revenue for the quarter.
With the production cut already factored in (and Wall Street estimates reflecting this), analysts believe the downside potential for the iPhone 17 series, slated for release next year, may be limited. They are hopeful for an early launch of the iPhone 17.
The results were a mixed bag—September quarter revenue came in below our expectations, but above consensus estimates, Woodring and his team stated in a report. They attributed this primarily to lower iPhone average selling prices and slightly weaker services performance.
However, analysts pointed out that this still represented a better performance than the firsttwo quarters of September, reflecting the strong late-cycle performance of the iPhone 15.
Meanwhile, Seeking Alpha analyst Uttam Dey expressed a positive view on the earnings. Dey commented, Apple’s fourth-quarter results were solid, beating expectations, with iPhone sales growing 6% year-over-year, indicating continued strong demand for its smartphones.
He highlighted that Apple’s fourth-quarter performance contrasted sharply with Samsung Electronics’ third-quarter results earlier this week, which showed the South Korean smartphone maker losing its early momentum in the AI smartphone space.
Dey added that Apple’s results also suggest early signs of theiPhone 16’s potential popularity in the smartphone market, indicating that the iPhone we’ve been waiting for is finally here.
The debate surrounding Apple’s guidance highlights the ongoing uncertainty surrounding the smartphone market, with analysts closely watching for signs of consumer demand and the impact of AI integration. Whilesome see potential for continued growth, others remain cautious about the near-term outlook.
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