Apple Forecasted to Report Record Earnings Next Week, but Will iPhone 8 Keep Driving Growth?

[MacRumors]

Barclays estimates that Apple will report a record-breaking $76.6 billion in revenue when it announces its earnings results for the first quarter of fiscal 2017 on January 31. Apple reported revenue of $75.9 billion in the year-ago quarter, and offers guidance of $76 billion to $78 billion for this quarter.

UBS estimates Apple will report revenue of $77.8 billion next week, which falls on the higher end of Apple's guidance. UBS analyst Steven Milunovich maintained a "buy" rating for Apple stock with a target price of $127--compared to $120 currently--in a research noted issued to investors today.

Meanwhile, Barclays analyst Mark Moskowitz lowered his price target for Apple's stock from $119 to $117 in a research note issued to investors today.

Moskowitz does not expect "meaningful upside potential" for Apple in 2017. He believes customers increasingly "mixing down" by opting for the iPhone 6s in favor of the iPhone 7 could weigh on Apple, while he is also concerned about China and India failing to emerge as growth catalysts in the next 12 months.

He said the so-called "iPhone 8" will potentially have "no must-have advanced features," making him skeptical of a meaningful growth rebound for Apple in the second half of this year. He added that smartphones have become "more than good enough" to serve the needs of most users over multiple years or until the device breaks.

While not likely to have a similar replacement cycle of PCs (i.e., 5-7 years), we think the smartphone market and thereby the iPhone franchise stand to face incremental headwinds this year and next, as the smartphone useful life extends to 3 to 4 years from 2 to 3 years previously. As a result, the prospect of revolutionary technology incorporated into the next iPhone (iPhone 8) is not likely to counter the expanding useful life of smartphones in general.

Specifically, he said OLED display options, bezel or bezel-less designs, an embedded Home button, and wireless charging are commonly mentioned in its discussions with industry participants about the next iPhone, but that the new features might not be able to reassert that "must have" element for customers.

Wireless charging in particular may be limited by the need to be close to a charging base. Moskowitz does not expect wireless charging over greater distances to develop until 2018-2019 at the earliest. He acknowledges that Apple could be making strides in this space by partnering with firms like Energous, but he maintains his view.

Nevertheless, he said Apple has a "sticky ecosystem" and a large cash balance that provide decent support for long-term investors.

Barclays predicted Apple has long-term growth opportunities related to India, its growing services category, the enterprise market, artificial intelligence, and possibly the cloud, but it does not expect those potential "what's next?" opportunities to emerge as "major needle movers" for the company over the next 12 months.

Article Link: Apple Forecasted to Report Record Earnings Next Week, but Will iPhone 8 Keep Driving Growth?

 

[farewelwilliams]

stock prices are also forecasted to go in the opposite direction

 

[Andres Cantu]

Apple wants long-term growth opportunities, then don't upset your customers by not updating desktop Macs.

 

[djcerla]

The iPhone 8 will simply blow past the most optimistic estimates.

Apple is severely undervalued, that's why BlackRock raised their already huge stake in the company.

One year from now, people will be wondering why the hell they didn't buck up the truck at this unbelievable valuation.

 

[EdT]

iPhone 8, unless it has a Samsung battery level flaw, will keep Apple's profits stable. If it gets good press and reviews it will grow profits.

Laptop and Desktop computers aren't enough of Apples income that by ignoring them for another year will significantly impact profit. It will continue to alienate some of Apples longstanding fans however, and will probably require some actual response, whether that means actually updating the line or selling it off. The success of updating or selling depends on how significant the update is or how competent the company that buys the line is. But none of these possibilities will happen this year with computers.

 

[dumastudetto]

As far as I'm concerned, I already know the iPhone 8 will be a must buy. And everyone I talk to says the same - they cannot wait to get their hands on the new iPhones as soon as they launch.

 

[duffman9000]

I didn't buy in soon enough lol. When it was 90 I thought about a long term hold but was distracted by much more volatile stock.

 

[CarpalMac]

Difficult numbers to fathom. Even if they stopped everything and lived off the income from the AppStore alone, they'd still have an income that'd be the envy of a lot of other blue chip firms.

That said, their dependence on the iPhone in order to hit their overall income means they'd better not have a Note 7 type issue. They would likely not weather that storm nearly as well as Samsung been able to, thanks to their diverse portfolio of products.

 

[iMcLovin]

The only thing I find impressive with what apple has been doing the past year is how they are able to still rake in so much money.

 

[Tycho24]

In answer to article title:
YES

 

[Breaking Good]

Laptop and Desktop computers aren't enough of Apples income that by ignoring them for another year will significantly impact profit. It will continue to alienate some of Apples longstanding fans however, and will probably require some actual response, whether that means actually updating the line or selling it off. The success of updating or selling depends on how significant the update is or how competent the company that buys the line is. But none of these possibilities will happen this year with computers.

It would not surprise me to see Apple spin off its laptop/desktop business into a separate company. I think customers would actually benefit from this.

Apple will have a very hard time growing this business while maintaining its same margins on its other lines of business. Plus, operating as a separate company would mean it wouldn't have to sell hundreds of millions of units. So it could do small runs of 17" laptops of Mac Pros.

 

[Michael Scrip]

The only thing I find impressive with what apple has been doing the past year is how they are able to still rake in so much money.

It's simple... Apple sells a decent amount of high-margin products.

It's not that difficult to see how they make so much money.

Example: Apple can sell 50 million iPhones in a quarter with an average selling price of $600 each.

Boom... that's $30 billion in revenue in 3 months. Crazy, huh.

And nearly every product Apple sells has a high profit margin... so they make a healthy profit on each product too.

So again... it's not hard to figure out how Apple makes a lot of money.

 

[Whimseh]

Seeing as the iPhone 7 was to hold people over, the iPhone 8 should be amazing. Looking forward to it!

 

[ValO]

As far as I'm concerned, I already know the iPhone 8 will be a must buy. And everyone I talk to says the same - they cannot wait to get their hands on the new iPhones as soon as they launch.

Yes, but i am afraid that all the rumors are not for the 2017 iphones, but later models.
We' ll probably get an iphone pro this year, with perhaps a clickable lower chin/bezel that acts as an homebutton and all of the lower bezel part could be a fingerprint reader, and we' ll get a curved oled display. It will have a glass back and front with stainless steel frame sandwiched in between. It will have inductive but not wireless capabilities. It will be an apple s7/note 7 basically, nothing really new, just the design with better specs.
Nothing ground braking... and they' ll cost a ton, be limited in availability.

I feel a bit of dissappointment coming in september.

 

[A MacBook lover]

Yes, but i am afraid that all the rumors are not for the 2017 iphones, but later models.
We' ll probably get an iphone pro this year, with perhaps a clickable lower chin/bezel that acts as an homebutton and all of the lower bezel part could be a fingerprint reader, and we' ll get a curved oled display. It will have a glass back and front with stainless steel frame sandwiched in between. It will have inductive but not wireless capabilities. It will be an apple s7/note 7 basically, nothing really new, just the design with better specs.
Nothing ground braking... and they' ll cost a ton, be limited in availability.

I feel a bit of dissappointment coming in september.

You might be the only person

 

[Xgm541]

Apple wants long-term growth opportunities, then don't upset your customers by not updating desktop Macs.

While I agree that a company shouldn't abandon a particular user base, how does updating the desktop Mac benefit Apple in the "long term"? Desktops, or computers in general, are rarely a source for long term income.

 

[Born Again]

The iPhone 8 will simply blow past the most optimistic estimates.

Apple is severely undervalued, that's why BlackRock raised their already huge stake in the company.

One year from now, people will be wondering why the hell they didn't buck up the truck at this unbelievable valuation.

Thanks Tim. You have great things coming down the pipeline right?

 

[Rocketman]

With the shift from a growth company to an annuity company the analysts have been very downbeat. The fact is it is a far stronger franchise than Netflix which has a PE ratio of 329 vs the AAPL PE ratio of 14.5. That is up from its recent 8+, but below a typical S&P or Dow stock of 18. If they have earnings growth of about 12% and a return to a normal PE ratio the current $120 price could grow to $143. AAPL suffers from being the largest cap stock in the world so is used as a world currency. I BEGGED them to go private. My basis is $88.

 

[Lankyman]

iPhone 8, unless it has a Samsung battery level flaw, will keep Apple's profits stable. If it gets good press and reviews it will grow profits.

Laptop and Desktop computers aren't enough of Apples income that by ignoring them for another year will significantly impact profit. It will continue to alienate some of Apples longstanding fans however, and will probably require some actual response, whether that means actually updating the line or selling it off. The success of updating or selling depends on how significant the update is or how competent the company that buys the line is. But none of these possibilities will happen this year with computers.

Sadly the iPhone is Apple's only focus now, it's fast becoming a one trick pony.

 

[ValO]

You might be the only person

Yes, i could.
And i hope i am.
But apple' s trackrecord the last 2 year seems to be filled with disappointment gron the fans. Only exception for me are the airpods.

 

[TurboPGT!]

Prediction: iPhone 8 will make a lot of money.

Just like 7.
And 6.
And 5.
And 4.
etc.

Oh and another prediction: Whiny Macrumors members will have no impact on the outcome.

 

[DEMinSoCAL]

An untrained monkey could forecast this. Is it EVER anything but record profits for the quarter?

 

[soupcan]

So much money and such a trashy computer lineup.

What gives?

 

[Mavelous]

Barclays estimates that Apple will report a record-breaking $76.6 billion in revenue when it announces its earnings results for the first quarter of fiscal 2017 on January 31. Apple reported revenue of $75.9 billion in the year-ago quarter, and offers guidance of $76 billion to $78 billion for this quarter.

UBS estimates Apple will report revenue of $77.8 billion next week, which falls on the higher end of Apple's guidance. UBS analyst Steven Milunovich maintained a "buy" rating for Apple stock with a target price of $127--compared to $120 currently--in a research noted issued to investors today.

Meanwhile, Barclays analyst Mark Moskowitz lowered his price target for Apple's stock from $119 to $117 in a research note issued to investors today.

Moskowitz does not expect "meaningful upside potential" for Apple in 2017. He believes customers increasingly "mixing down" by opting for the iPhone 6s in favor of the iPhone 7 could weigh on Apple, while he is also concerned about China and India failing to emerge as growth catalysts in the next 12 months.

He said the so-called "iPhone 8" will potentially have "no must-have advanced features," making him skeptical of a meaningful growth rebound for Apple in the second half of this year. He added that smartphones have become "more than good enough" to serve the needs of most users over multiple years or until the device breaks.Specifically, he said OLED display options, bezel or bezel-less designs, an embedded Home button, and wireless charging are commonly mentioned in its discussions with industry participants about the next iPhone, but that the new features might not be able to reassert that "must have" element for customers.

Wireless charging in particular may be limited by the need to be close to a charging base. Moskowitz does not expect wireless charging over greater distances to develop until 2018-2019 at the earliest. He acknowledges that Apple could be making strides in this space by partnering with firms like Energous, but he maintains his view.

Nevertheless, he said Apple has a "sticky ecosystem" and a large cash balance that provide decent support for long-term investors.

Barclays predicted Apple has long-term growth opportunities related to India, its growing services category, the enterprise market, artificial intelligence, and possibly the cloud, but it does not expect those potential "what's next?" opportunities to emerge as "major needle movers" for the company over the next 12 months.

Article Link: Apple Forecasted to Report Record Earnings Next Week, but Will iPhone 8 Keep Driving Growth?

I miss the days of Apple financially struggling while they continually upgraded their hardware........so sad

 

[A MacBook lover]

Yes, i could.
And i hope i am.
But apple' s trackrecord the last 2 year seems to be filled with disappointment gron the fans. Only exception for me are the airpods.

I've not been disappointed with Apple the last two years compared to the competition