At any point of the digital transition,…
JPMorgan Chase assumes that investors are prepared, and that Apple’s first-quarter 2021 earnings report will be weaker, but that Mac and services will still boost stock prices. Apple’s first quarter of 2021 earnings are very different from the last time, according to chief analyst Samik Chatterjee, because attention to short-term profit drivers has eased after the busy holiday season.
In particular, iPhone manufacturing is slowing, owing to China’s sluggish smartphone shipments, which have a bearing on the iPhone 12 and iPhone 12 Pro 5G sales momentum. Investors, according to Chatterjee, are prepared for a poor result.
Investors, on the other hand, should expect a modest upside, according to the analyst. Facing concerns that the work-from-home trend will disappear, he believes the key factors are the strong growth of the service market and the current momentum of Mac and iPad shipments. The monitoring of iPhone sales by JPMorgan Chase is in line with expectations.
Furthermore, Chatterjee claims that no specific guidance will be issued by Apple in the third quarter of 2021. He expects that Apple’s iPhone sales will be lower this year than in 2020. According to him, a higher multiple of hardware product cycles would result from a rise in TAM in the service sector and a greater combination of service industry revenue/revenue. The iPhone’s sustainable replacement rate surpassed expectations after the increase in Apple’s 5G market share caused a 5G boom, among other medium-term driving factors.
The analyst’s estimate for wearable devices was marginally lowered, but his forecast for overall sales was increased. Apple’s revenue in the first quarter of 2021 is expected to be US$782 billion, with earnings per share of US$0.99, according to Chatterjee, while the consensus is US$76.8 billion and US$0.98.
In the first quarter of 2021, he expects Apple to ship 52 million iPhones, generating revenue of 42 billion dollars; iPad revenues of 5.5 billion dollars; Mac revenues of 8.5 billion dollars; wearable device revenues of 7.4 billion dollars; and service revenue of US$15.8 billion, up 18 percent year over year. Based on estimated earnings per share of US$4.96 in December 2022 and a mixed P/E multiple of approximately 30 times, the analyst maintains a 12-month AAPL target price of US$150.