{"id":4771,"date":"2022-01-20T17:25:05","date_gmt":"2022-01-20T17:25:05","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/20\/apple-poised-to-break-holiday-quarter-financial-records-despite-challenges-katy-huberty-says\/"},"modified":"2022-01-20T17:25:05","modified_gmt":"2022-01-20T17:25:05","slug":"apple-poised-to-break-holiday-quarter-financial-records-despite-challenges-katy-huberty-says","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/20\/apple-poised-to-break-holiday-quarter-financial-records-despite-challenges-katy-huberty-says\/","title":{"rendered":"Apple poised to break holiday quarter financial records despite challenges, Katy Huberty says"},"content":{"rendered":"

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Morgan Stanley’s Katy Huberty expects Apple to break holiday quarter earnings and edge out Wall Street’s expectations for the quarter thanks to iPhone<\/a> production improvements and Services performance. <\/p>\n

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In a note to investors seen by AppleInsider<\/em>, Morgan Stanley lead analyst Katy Huberty<\/a> says she expects Apple to report December quarter earnings that come out ahead of Wall Street estimates. She did not update her 2022 or 2023 Apple estimates, however. <\/p>\n<\/div>\n

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For the December quarter, Huberty is forecasting total revenue of $122.3 billion, 41.9% gross margin, and earnings-per-share (EPS) of $1.97. That’s higher than Wall Street is predicting, with consensus at $118.3 billion in revenue, gross margins of 40.5%, and EPS of $1.89. <\/p>\n<\/div>\n

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On the product side, the analyst notes that she is 3% ahead of Wall Street on iPhone revenue because of a number of promising data points, including fewer than expected manufacturing disruptions and robust demand in key markets like China. <\/p>\n<\/div>\n

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She believes that the iPhone lineup largely outperformed consensus estimates, and predicts that Apple shipped 83 million models in the holiday quarter. <\/p>\n<\/div>\n

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Huberty also notes that her Mac estimates are slightly ahead of consensus as well, though she has reduced her iPad shipment forecast to 14.9 million units from 17 million units. <\/p>\n<\/div>\n

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The analyst’s Services revenue forecast is also ahead of what Wall Street is thinking. She believes the company will report category revenue of $19.2 billion, which would be up 21.7% year-over-year. That’s attributable to stronger-than-expected App Store<\/a> growth in the December quarter, as well as growth in Apple’s Licensing & Other segment, which includes Google’s search engine payments to Apple. <\/p>\n<\/div>\n

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Huberty believes that Apple will hold off on issuing official guidance for the March quarter given the ongoing pandemic, but she does think that a supply and demand “rebalancing” will take place during the quarter. She expects 55 million iPhone units, which is slightly ahead of what build numbers would suggest. <\/p>\n<\/div>\n

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Although Apple shares have underperformed the S&P 500 in the December quarter, Huberty says she would be a buyer of Apple shares on any weakness post-earnings because of the company’s position as a defensive stock. <\/p>\n<\/div>\n

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The analyst’s estimates \u2014 and Wall Street’s consensus \u2014 are all based on third-party data and predictions, given that Apple hasn’t reported individual unit sales in five years, and hasn’t provided revenue guidance since the start of the Covid-19 pandemic. Analysts have gotten it wrong, and sometimes dramatically<\/a>, in the past because of the lack of solid information and bad assumptions. <\/p>\n<\/div>\n

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Huberty maintains her 12-month Apple price target of $200, which is based on a 5.7x enterprise value-to-sales (EV\/Sales) multiple on Apple’s product business and a 10.9x EV\/Sales on Services. It’s also based on $301 billion of enterprise value placed on Apple’s future products, driven by $22 billion of revenue and a 15x EV\/Sales multiple. This implies a 32.8x target price-to-earnings (P\/E) multiple.<\/p>\n<\/div>\n<\/div>\n