In analyst, Katy Huberty claims recent audits indicated that the adoption of 5G, the shift to education and remote work, and the sustained engagement of the App Store have all led Apple to a potential blockbuster a quarter of December.
Wall Street record ahead for AAPL
Morgan Stanley’s Huberty wrote to his clients:
We believe Apple is likely to post record quarterly revenue and earnings.
The analyst expects Apple to show double-digit year-over-year growth in its five revenue segments, including iPhone, Mac and services.
Huberty forecasts Apple revenue of $ 108.2 billion for the 4th quarter of 2020 (or Q1 2021 for Apple’s taxation), or about 5% above Wall Street expectations. Its earnings per share estimate of $ 1.50 is 7% above consensus. The analyst also notes that all of Morgan Stanley’s individual sector estimates are above Wall Street expectations, with the exception of services.
This momentum is expected to continue until 2021, adds Huberty. The outlook is supported by a solid launch of Apple’s most successful iPhone 12 line over the past five years.
Demand for the higher-tier iPhone 12 Pro and iPhone 12 Pro Max is also driving Apple’s average selling price up. Additionally, Huberty says concerns about the weakness of the iPhone 12 and iPhone 12 mini are “somewhat misguided” as these devices are more popular in international markets.
The analyst expects 78 million iPhone shipments in the December quarter, up more than 6% year-over-year. It models an average basket of $ 825, up 8% year over year. She says it will generate “iPhone” revenue of $ 63.9 billion in December, up 14% from 2019 and 7% ahead of expectations.
Apple’s iPhone strength is also expected to continue through 2021, with Morgan Stanley forecasting 220 million iPhone shipments during the year. This is based on several factors, including the fact that builds in the March quarter appear to be exceeding seasonal expectations.
One indicator of iPhone performance in 2021 will be Apple’s performance in China, especially thanks to Huawei’s decline.
Huberty expects similar strength in the iPad, Mac and Wearables segments. She expects particularly strong results for the Mac due to the launch of the M1 chip.
On services, Huberty points out that the App Store surpassed expectations for a third consecutive quarter, growing 31% year-on-year in the December quarter. Leaving the rest of Morgan Stanley’s services revenue unchanged, that could imply revenue of $ 14.84 billion in the December quarter.