Wedbush believes that Apple will be able to meet the expectations of Wall Street when it reports its earnings for the June quarter, despite the adverse effects of the macroeconomic environment.
An analyst at Wedbush, Daniel Ives, claims that demand for iPhones is holding up better than predicted in the face of supply concerns afflicting the tech industry. He expects Apple’s Q3 2022 earnings to be in line with market expectations.
During the June quarter, analysts estimate Apple will announce revenues of roughly $82 billion and earnings of $1.16 per share.
However, Wall Street expects Apple’s June quarter to be dismal. iPhone 14 production and demand cycles are being watched closely by Ives. Apple is also working on an aggressive product pipeline that might include a new mixed-reality headset for 2023.
When it comes to Apple’s supply chain, the quarter ending in June is “peak anxiety.” However, despite Apple’s warning of a $4 billion to $8 billion revenue loss, the supply and COVID shortages are expected to subside in September and December.
When it comes to macroeconomic storms, Apple relies on the strength of its installed base. Ives maintains his belief in the iPhone upgrade cycle’s stickiness, given that 240 million of Apple’s 1 billion iPhone owners have yet to update.
Services are also expected to do well in the second half of 2022 and the first half of 2023. According to Ives, this area alone is worth more than $1 trillion. Combining it with its technology makes him believe that the risk/reward ratio is “very appealing at current levels.”
According to Ives, “although the apprehensive market backdrop is creating a frightening environment for tech equities, we believe Apple’s growth story is well intact despite the fragile macro.”
Ives keeps his “outperform” rating and $200 price target for Apple for the next year. As a result of his 2022 calculations, he set a target based on a sum-of-the-parts valuation of 18x for services and 7x for hardware at $1.5 trillion and $2.1 trillion, respectively.