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Apple's June guidance will miss Street estimates - Barclays

Published 23/04/2024, 12:52
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Barclays analysts said they expect Apple (NASDAQ:AAPL) to report in-line results for the March quarter, but believe the tech giant’s June quarter guidance will miss expectations “due to softening hardware demand, which would continue a multi-quarter trend for AAPL,” they wrote.

Specifically, while analysts expect Apple’s March quarter to align closely with expectations, they project a slight decrease in iPhone revenue, offset by marginally higher revenues from iPad and Mac sales.

They also expect Services growth to remain steady at around 11%.

“We estimate 50.5M iPhones for March-Q, vs. the Street estimate a bit/1M higher,” the analysts wrote.

“More importantly, the June-Q hardware guide could miss Street estimates due to softening demand, and we think the sell-side consensus estimates are too high. We are hearing 42M iPhone sell-in for June-Q and 39M build, vs. the Street at 44M sell-in,” they added.

Recent checks indicate that sales of the iPhone 15 in China continue to experience double-digit declines year-over-year in recent weeks, following a 20% drop in the first quarter.

The sales mix has shifted towards the base models, leading to a negative mix shift and margin headwinds, and likely resulting in year-over-year declines in average selling prices (ASPs), Barclays notes.

While management may continue to direct attention toward Vision Pro, Barclays views this product as immaterial to Apple's financial results for at least this year and next.

“We don’t expect IP16 to have significant design changes, and any differentiated GenAI applications with the iPhones will likely not launch until 2025 at the earliest. The initial build plan for IP16 is expected to be in low 80Ms range, implying flattish unit growth Y/Y,” the team said.

Analysts reiterated an Underweight rating on AAPL.

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