Apple Inc. (AAPL.US)reported its fourth-quarter earnings and issued a conservative outlook for the upcoming quarter,eliciting mixed reactions from analysts. While some remain optimistic about iPhone sales, others express concerns about potential production cuts.
Morgan Stanley, for instance, maintained its Overweight rating on Apple with a price target of $273, citing both bullish and bearish signals. The firm highlighted improved gross margins and accelerated servicegrowth as positive indicators, but also acknowledged the company’s indication of production cuts in the December quarter. This mixed bag of information has left analysts divided.
Erik Woodring, leading a team of analysts, believes that while the stock pricemay experience short-term volatility, downside potential is limited. They emphasize the crucial role of consumer response to Apple Intelligence, the company’s first-phase AI features, in driving December quarter performance.
Analysts further noted that Apple’s outlookfor the first quarter of fiscal 2025 was a mixed bag, with revenue slightly below Morgan Stanley/buy-side expectations but gross margins exceeding market consensus. This suggests a potential iPhone production reduction of 3-4 million units, confirming earlier predictions. However, analysts still anticipate iPhone revenue to remain flat during the quarter.
With the news of production cuts already factored in (and Wall Street estimates reflecting this), analysts believe the downside potential for the upcoming iPhone 17 series, slated for release next year, might be limited. They express hope for an early release of the iPhone 17.
The results were indeed a mixedbag – 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 average selling prices for iPhones and a slightly weaker performance in services.
However, analysts pointed out that this still represented a better performance than the first two quarters ofSeptember, reflecting the strong late-cycle performance of the iPhone 15.
Meanwhile, Seeking Alpha analyst Uttam Dey expressed a positive view of the earnings. Dey commented, Apple delivered solid fourth-quarter results, exceeding expectations, with iPhone sales growing 6% year-over-year, indicating continued strength insmartphone demand.
He highlighted the stark contrast between Apple’s fourth-quarter performance and Samsung Electronics’ third-quarter results earlier this week, which showed the South Korean smartphone manufacturer losing its early momentum in the AI smartphone space.
Dey added that Apple’s results also provide early indications of potential popularity for the iPhone16 in the smartphone market, suggesting that the iPh
References:
- Source Article: Apple’s Conservative Outlook Sparks Mixed Reactions Among Analysts
- Morgan Stanley Report
- Seeking Alpha Analyst Report
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