Apple recently announced that it will start mass production of the iPhone 14 series soon. Since this update, there are new reports in the financial market that Apple’s iPhone is the primary reason for its incredible revenue generation due to a magnanimous number of sales.
Wedbush analyst Daniel Ives claims in a note to investors reviewed by AppleInsider that despite supply problems hitting the tech sector, he expects iPhone demand to hold up slightly better than anticipated. He thinks Apple’s Q3 2022 financial results will meet expectations.
Wedbush predicts that Apple will likely surpass Wall Street estimates when it reports its June quarter profits.
In the June quarter, analysts anticipate Apple to post revenue of about $82 billion and earnings-per-share of $1.16.
Wall Street still anticipates Apple to experience difficulties in the June quarter, though. Ives claims that “all eyes” are on the cycle of supply and demand for the iPhone 14. A new mixed-reality headset might be part of Apple’s aggressive product pipeline that the company is focusing on for 2023.
The “peak worry” for Apple’s supply chain issues will be the June quarter. Although Ives anticipates any Covid or supply delays to abate in the September and December quarters, Apple warned of a $4 billion to $8 billion revenue blow. Recently, we reported that the iPhone 14 Max variant was facing display supply chain issues.
Apple’s installed base is the key to surviving the macroeconomic storms, as is customary. Since almost 240 million of Apple’s 1 billion iPhone owners have not yet upgraded their devices, Ives continues to hold on to the notion that the iPhone upgrade cycle is stubborn.
Services appear to be in good shape going into the second part of 2022 and 2023. Ives estimates that the value of Apple’s services alone is greater than $1 trillion. He considers the risk/reward to be “extremely appealing at current levels” when taken into account its hardware.
Ives said that “While the nervous market backdrop is creating a fearful environment for tech stocks, we believe Apple’s growth story remains well intact despite the shaky macro.”
Ives continues to rate Apple as Outperform and has a $200 price target for the next year. His objective is predicated on a sum-of-the-parts valuation of his 2022 projections, which translates to an 18x multiple on services at $1.5 trillion and a 7x multiple on Apple’s hardware division at $2.1 trillion.
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