Apple’s stock has faced its fair share of concerns this year, including an impending antitrust lawsuit, a battle over Apple Watch sensors, and pressures in China. However, there may be a glimmer of hope for investors amidst all the skepticism.
Analyst Amit Daryanani from Evercore ISI believes that buy-side expectations for the most recent quarter are likely below the consensus view. This means that if Apple can even just meet consensus projections for its latest quarter, the stock could see an upward movement. Particularly, if Apple can demonstrate continued solid iPhone performance in China, it would further support this positive outcome. Daryanani himself predicts that the company will show “modest upside” in its results.
Daryanani recently opened a tactical outperform call on Apple’s stock, expressing bullishness about the stock over the long term. However, this tactical call specifically reflects targeted optimism about a near-term event: the upcoming earnings report for the December quarter, set to be released on Feb. 1.
Despite facing competitive and economic challenges in China, Daryanani believes that Apple has several factors working in its favor to counteract these pressures. Firstly, the company has been gaining market share in emerging markets. Additionally, in more developed countries, Apple has seen an increase in the average selling price of iPhones.
These positive trends likely contributed to stable iPhone revenue in the December quarter, and they could continue to support Apple’s performance in March as well.
Apple’s Growth in High-Margin Services Business
Apple investors are being cautious about the company’s high-margin services business. However, industry expert, Daryanani, believes that Apple will maintain its growth at a high-single-digit or low-double-digit rate. This growth is expected to be fueled by increasing payments from Google and the continued success of the App Store.
Potential Antitrust Investigation
There have been rumors of a potential large-scale antitrust investigation by the Justice Department into Apple. However, it is unlikely that Apple will comment on this during their earnings call.
Minimal Impact from Apple Watch Disputes
Apple faced disruptions to its Apple Watch business due to a patent dispute. However, this issue is expected to have a minimal impact on the company’s December-quarter results. The ban on the disputed sensor was only in place for a short period and has since been reinstated.
Early Indications of Demand for Vision Pro Headset
One aspect to monitor during Apple’s earnings call is the early indications of demand for their Vision Pro headset. Preorders for this mixed-reality device have recently started at a price of $3,499. While sales from this device did not factor into the latest quarter, executives might provide some insights during the earnings call.
Market Performance
Apple shares rose by 3.3% during Thursday’s regular session following an upgrade by BofA Securities. In premarket trading on Friday, the stock was up by 0.7%. However, it is important to note that Apple’s stock is down about 2% since the start of 2024.
