Apple (GET IN. AAPL:It is scheduled to report first-quarter financial results on Thursday, and the tech giant’s quarterly report could give investors further insight into how its supply chain is performing and what impact it is having. it was on the all important iPhone.
In November, Apple ( AAPL ) warned that disruptions related to COVID-19 in China would lead to lower iPhone 14 supplies. Since then, Apple’s ( AAPL ) main iPhone maker, Foxconn, also known as Hon Hai Precision ( OTCPK:HNHAF ), has faced labor unrest and dealt with the impact of China’s COVID-19 policies, both of which also led to a sharp decline. November income. A month later, Foxconn reported a sharp increase in December earnings as its main iPhone factory in Shenzhen, China, returned to normal operations.
In addition, China has effectively dismantled its COVID-19 policies that had hampered economic growth in the world’s most populous country, including easing travel restrictions.
Analyst consensus expects Apple ( AAPL ) to post quarterly earnings of $1.96 per share on revenue of $122.05 billion.
In addition to the state of the iPhone and its supply chain, Apple ( AAPL ) and its management, led by CEO Tim Cook, can give investors insight into consumer health as the global economic outlook continues to weaken and fears of a recession linger. occur
Wells Fargo recently cut its 2023 estimates, citing sharp stock gains this year and signs of “increasing weakness in consumer demand.”
“The pull out of aggregate demand vs. weakening consumer demand… and uncertainties surrounding the pace of recovery from the post-COVID China lockdown leave us with a gradually cautious stance through 2023 — now. [estimate calendar 2023 iPhone shipments] by 216.4 million or -7% [year-over-year]or roughly 10% below consensus,” analyst Aaron Rakers wrote in an investor note.
Bank of America analyst Vamsi Mohan, who has a neutral rating and $153 price per share on Apple ( AAPL ), recently said the forecast for the March quarter could be very weak, perhaps 20% more than expected. :
“The tone of the call will be critical to understanding the underlying demand trajectory [December quarter] supply was significantly limited for the high-end Pro models of iPhones,” Mohan wrote in a note to customers.
Mohan added that his iPhone tracker shows availability of the device has returned to normal “and leads us to conclude that demand may be softer than expected. [the first-half of 2023]”.
On the bright side, if Apple ( AAPL ) were to see a resurgence in services on the back of improved video game performance and ad stability, that would be a “net positive,” Mohan added.
Other upsides could be lower foreign exchange exposure, China’s continued reopening and progress in vertical integration as Apple ( AAPL ) continues to import more components domestically, Mohan explained.
Last month, Deutsche Bank cut its 2023 estimates for Apple ( AAPL ) ahead of the iPhone maker’s fiscal first-quarter earnings release.