Apple Beats Estimates but Shares Dip on Supply Chain Warning, Analysts Remain Bullish as Headwinds are ‘Transitory’
2022.04.29 14:11
Apple (AAPL) Beats Estimates but Shares Dip on Supply Chain Warning, Analysts Remain Bullish as Headwinds are ‘Transitory’
Apple (NASDAQ:AAPL) reported EPS and revenue that beat consensus estimates but shares are still down 2.5% on supply chain commentary.
The tech giant reported EPS of $1.52 in the second quarter, up from $1.40 in the year-ago period and above analyst estimates of $1.42 per share. Revenue stood at $97.28 billion in the period, up 8.6% YoY, topping the consensus projection of $93.98 billion.
Products revenue came in at $77.46 billion, up 6.6% YoY and above the projected $75.4 billion. Apple generated $50.57 billion in iPhone revenue, up 5.5% and beating the estimated $49.16 billion.
Mac revenue totaled $10.44 billion, up 15% YoY and compared to the consensus estimates of $9.23 billion. The company reported service revenue of $19.82 billion, up 17% YoY and just above the expected $19.78 billion.
Greater China revenue came in at $18.34 billion, up 3.5% YoY. The company reported a gross margin of $42.56 billion, up 12% YoY.
Apple raised quarterly dividends by 5% to 23c per share from 22c. AAPL also approved an increase of $90 billion for its share repurchase program.
“We are very pleased with our record business results for the March quarter, as we set an all-time revenue record for Services and March quarter revenue records for iPhone, Mac, and Wearables, Home and Accessories. Continued strong customer demand for our products helped us achieve an all-time high for our installed base of active devices,” said Apple CFO Luca Maestri.
The management said that supply constraints will have a $4-$8 billion impact on revenues during the current quarter.
Morgan Stanley analyst Katy Huberty lowered the price target to $195.00 per share from $210.00 but remains positive after seeing “better than expected” results. The analyst sees the China reopening as a key to revenue upside.
“June quarter demand commentary struck us as notably more positive than other consumer reports this earnings season, with underlying demand trends suggesting Y/Y revenue growth in the June quarter could be inline to slightly stronger than the March quarter (of 9% Y/Y)… We view revenue mix and product cycles as factors more likely to influence margins. This sets Apple up for more stable profits than the rest of our IT Hardware coverage if high-end consumer demand sustains,” Huberty commented.
Piper Sandler analyst Harsh Kumar also lowered the price target to $195.00 from $200.00 while adding that “transitory headwinds” are overshadowing strong business trends.
“In our view, the guidance may be considered a disappointment for all the wrong reasons. In the June quarter, Apple is being impacted by two transitory, nonoperational issues: 1) a 150 bps headwind from the sales ban on Russia and 2) another 300 bps headwind from FX. In addition, the company is facing a $4 billion to $8 billion headwind from COVID shutdowns in China and silicon shortages. The company’s fundamentals seem to be headed in the right direction, but the short-term transitory impacts are distorting June quarter results,” Kumar wrote to clients.
By Senad Karaahmetovic
