Apple Inc. (AAPL) is due to report earnings on May 5, after market close. The report will be for the fiscal quarter ending Mar 2023. Based on 12 analysts’ forecasts, Zacks Investment Research expects the consensus EPS forecast for this quarter to be $1.44, a bit lower than the reported EPS for the same quarter last year at $1.52.
This multinational technology company with a wide range of services and products, including the design, manufacture, and sale of smartphones (iPhone), personal computers (Mac), tablets (iPad), wearables and accessories (Apple Watch, AirPods, Apple Beats), TVs (Apple TV), iCloud, digital content stores, streaming, and licensing services will have more chance to have a positive report, as its different services will cover each others’ lose and gain.
The consensus $1.44 EPS forecast for this quarter represents a decline of 6% from the same quarter last year ($1.52). The market also projected a $92.84B revenue, substantially down from the $117.15B reported in the previous quarter and 5% less than the same period in 2022 ($97.28B).
In Q1, Apple sales revenue recorded its most significant decline since 2016, by over -5% compared to the same period last year, and this decline can continue this quarter as well. Among the top products, the most significant drop was in Mac sales revenue by $7.74B, which indicates a 28.66% year-over-year decline. Among other products, iPhone sales also were less by 8.17% on the annual scale in the previous quarter. However, the iPad revenue surprisingly rose by 29.66% year-over-year, reaching $9.4 billion, mostly thanks to increasing demand from China, and is likely to continue into the March quarter as well.
Looking at the Apple company in previous years, we can understand that they now mainly focus on services, compared with products, and sales need more clients. This demand for new customers and subscribers brought them 2 billion active users on all of its products, up from 1.8 billion as reported in January last year. This user increase can raise the company’s revenue.
Apple’s services segment so far is just one-third of operation profits but experienced underwhelming growth in 2023. Remember, this share was only 5% in fiscal Q4 last year. However, in the short term, it is unlikely that we will be able to give it a more colorful role, but in a long time, the service sector may even become the most profitable sector of the company. Considering the weaker ad sales and gaming struggles, we can expect a weak performance. However, investments in newer initiatives like Apple TV+ could offer potential upside in the long term.
While the overall fundamental expectation is not bright, technical indicators remain bearish in the short term but confirm the strong buy above $150 US Dollars in a long time. Before the $150 pivot, we can see the first support at $157 in case of losing the earnings estimate and overall negative sentiment in the market. On the positive side, August 2022 high at $176 is the first resistance and target, which can open the doors to a 2022 high of around $180.
