Apple seen posting record $90 billion holiday quarter driven by Services & iPhone 11 deman...

Posted:
in AAPL Investors edited October 2019
Financial services firm Cowen has issued its latest guidance to investors about the state of Apple, and says that the company's offerings in total are setting up for a massive holiday quarter.

Strong demand for the iPhone 11 expected to mean Apple exceeds earnings forecasts
Strong demand for the iPhone 11 expected to mean Apple exceeds earnings forecasts


Ahead of Apple's next financial earnings call, a Cowen investor note seen by AppleInsider says the company will exceed expectations and earn $90 billion in the quarter spanning the holiday buying season.

That's around $3.1 billion more than previous estimates, and the company says this is predominantly due to increased demand for the iPhone plus growing Services.

"[Recent]... third party data suggests the recent price cut to the XR model and newly launched 11 are seeing healthy demand," says the investor note. "Continued expansion in the iPhone trade-in program and 0% financing options are also expected to play a part in improving affordability."

"We think gaming driven revenues in China are likely now normalized after the catchup in game approvals earlier in the year and could be seasonally up," it continues. "We expect AppleCare (correlated with new device units) to be seasonally up in the Sep Q, Apple Music to be up seasonally."

Cowen expects 69 million iPhones to be made in the fourth quarter, up slightly from its previous prediction of 63 million.

"The iPhone 11 product cycle... [is] off to a solid start," it reports, "and the upcoming TV+ service supports longer term Services growth."

Cowen says that the reception to the iPhone 11 has been clear to investors, but Apple TV+ has not.

"Services seems like a black box to many investors," it says, "but it appears that as long as the Services revenue grows and gross margins hold up, investors seem to be fine with it."

In the short to medium term, Cowen sees three "forthcoming catalysts" that could affect Apple's earnings. These are the launch of Apple TV+, and an update on US import tariffs on December 15.

There is also the potential launch of a low-cost "iPhone SE 2," which Cowen believes could see Intel remaining as a chip provider.

"We do also believe Intel could remain in the supply chain as a supplier of 4G modems for the potential low-cost iPhone SE2 model in [the first half of 2020]," it says.

Tim Cook will introduce Apple's next financial earnings call on October 30
Tim Cook will introduce Apple's next financial earnings call on October 30


Over the longer term, Cowen expects to see Apple profiting from the launch of 5G models in late 2020. Those models will use Qualcomm modems, and Cowen notes that this is part of a six-year deal between Qualcomm and Apple. However, it also sees Apple replacing Qualcomm with its own modem.

"We also estimate that an Apple developed discrete modem could find its way on the product roadmap by 2022," the investor note continues. "Having both apps processor and modem developed in house could allow Apple to potentially integrate both chips together for future products, and has positive gross margin implications."

Apple's next legally-required financial earnings call is due on October 30. Cowen recommends investors look out for the call to detail "iPhone demand trends in China/India" plus information about tariffs.
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Comments

  • Reply 1 of 33
    lkrupplkrupp Posts: 10,557member
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    edited October 2019 AppleExposed
  • Reply 2 of 33
    avon b7avon b7 Posts: 7,838member
    I doubt it. The idea behind the claim is reasonable. Hardware is much better than last year and prices have come down. In the case of the XR, by a lot. There also appears to have been a lot of older phones ripe for update.

    All speculation though.
    muthuk_vanalingam
  • Reply 3 of 33
    SoliSoli Posts: 10,038member
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    I also noticed there were several positive reports about Apple lately.
  • Reply 4 of 33
    MacProMacPro Posts: 19,778member
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    Anyone checked if Hell is freezing over?
    jax44bshank
  • Reply 5 of 33
    I hope Apple posts a $90 billion holiday quarter.

    Won’t affect me as I don’t own any Apple stock. But it will be hilarious seeing all the rage from the haters whose happiness depends on Apple failing.
    AppleExposedStrangeDaysbshank
  • Reply 6 of 33
    SoliSoli Posts: 10,038member
    I hope Apple posts a $90 billion holiday quarter.

    Won’t affect me as I don’t own any Apple stock. But it will be hilarious seeing all the rage from the haters whose happiness depends on Apple failing.

  • Reply 7 of 33
    spice-boyspice-boy Posts: 1,450member
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    Please take off that aluminum foil hat. 
    muthuk_vanalingamAppleExposed
  • Reply 8 of 33
    spice-boyspice-boy Posts: 1,450member
    Wow just checked out the comments forum a Mac Rumors on a story about Tim Cook. Those guys are even bigger homophobes than AI readers. If you doubt me notice how AI never opened the comments option on its story about Cook and "coming out". 
    edited October 2019 StrangeDaysbshank
  • Reply 9 of 33
    doggonedoggone Posts: 386member
    This is usual par for the course behavior for analysts.  Primarily it is because iPhone sales are much better than initially expected.  So the stock go back up to where it should be and everyone jumps on the bandwagon.  If Apple announce bullish numbers for this quarter then expect the analysts to first go wild and then start to spread FUD to drive the price down. 
    Worth to note, many iPhone purchases may be held off for Nov to take advantage of the AppleTV+ deal when purchasing a device.  I know I am holding off for a few weeks now that I am eligible for an upgrade.
    AppleExposed
  • Reply 10 of 33
    camccamc Posts: 45member
    doggone said:
    This is usual par for the course behavior for analysts.  Primarily it is because iPhone sales are much better than initially expected.  So the stock go back up to where it should be and everyone jumps on the bandwagon.  If Apple announce bullish numbers for this quarter then expect the analysts to first go wild and then start to spread FUD to drive the price down. 
    Worth to note, many iPhone purchases may be held off for Nov to take advantage of the AppleTV+ deal when purchasing a device.  I know I am holding off for a few weeks now that I am eligible for an upgrade.
    Same here.
  • Reply 11 of 33
    I hope Apple posts a $90 billion holiday quarter.

    Won’t affect me as I don’t own any Apple stock. But it will be hilarious seeing all the rage from the haters whose happiness depends on Apple failing.
    Like those Apple fanboys to pray on the failure of anyone remotely seen as a competitor - maybe it's a case of you give what you get?
    avon b7
  • Reply 12 of 33
    MacProMacPro Posts: 19,778member
    doggone said:
    This is usual par for the course behavior for analysts.  Primarily it is because iPhone sales are much better than initially expected.  So the stock go back up to where it should be and everyone jumps on the bandwagon.  If Apple announce bullish numbers for this quarter then expect the analysts to first go wild and then start to spread FUD to drive the price down. 
    Worth to note, many iPhone purchases may be held off for Nov to take advantage of the AppleTV+ deal when purchasing a device.  I know I am holding off for a few weeks now that I am eligible for an upgrade.
    Correct me if I am wrong but the offer was the free year if anything purchased after September surely?  It's the launch that is on November 1st not the commencement of the offer.
    AppleExposedbshank
  • Reply 13 of 33
    avon b7avon b7 Posts: 7,838member
    MacPro said:
    doggone said:
    This is usual par for the course behavior for analysts.  Primarily it is because iPhone sales are much better than initially expected.  So the stock go back up to where it should be and everyone jumps on the bandwagon.  If Apple announce bullish numbers for this quarter then expect the analysts to first go wild and then start to spread FUD to drive the price down. 
    Worth to note, many iPhone purchases may be held off for Nov to take advantage of the AppleTV+ deal when purchasing a device.  I know I am holding off for a few weeks now that I am eligible for an upgrade.
    Correct me if I am wrong but the offer was the free year if anything purchased after September surely?  It's the launch that is on November 1st not the commencement of the offer.
    I think you are correct. I believe the offer of a free one year subscription with iPhone purchase went live on 10 Sept 2019.
  • Reply 14 of 33
    BxBorn said:
    I hope Apple posts a $90 billion holiday quarter.

    Won’t affect me as I don’t own any Apple stock. But it will be hilarious seeing all the rage from the haters whose happiness depends on Apple failing.
    Like those Apple fanboys to pray on the failure of anyone remotely seen as a competitor - maybe it's a case of you give what you get?

    Bullshit. That’s just projection.

    Everyone knows the majority of worthless trolls online are of the anti-Apple, pro-Android variety. 
    AppleExposedStrangeDaysbshank
  • Reply 15 of 33
    Whatever it is, AAPL is really skyrocketing this morning.
  • Reply 16 of 33
    davgregdavgreg Posts: 1,039member
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    The stock market is a rigged casino. The little guy can only expect to have a decent chance with longer term investing where the only prices that count are the day you buy and the day you sell.

    I bought my first Apple shares about the time of the OS X Public Beta and stopped buying on the run up before the 7-1 split +/- low $300’s. Have not sold shares but have not added to the pile. Since then I have been diversifying. I have been pretty lucky on picks I made years ago and held like Apple and Amazon and had the good sense to get out of Tesla. Recently I have been putting most into cash/precious metals.

    Bottom line is that I own Apple stock and follow it, but do not trade it anymore because it seems manipulated. Your mileage may vary.

    AppleExposed
  • Reply 17 of 33
    Rayz2016Rayz2016 Posts: 6,957member
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    No, not pump and dump.

    Drive the price high by creating unrealistic expectations.
    Borrow a load of shares and then sell them. 
    Then put out loads of bad news to crash the share price.
    Buy back the shares at a lower price. Give back the shares to the mug who lent them to you.
    Pocket the difference.
    Can't remember the name for that. Anyone?
    edited October 2019 AppleExposed
  • Reply 18 of 33
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    They were bearish when the shorts were big to meet those price points. Now that that won't work in their favor due to Apple making it impossible they have to be bullish because Apple has righted their ship, even amidst the idiot in chief and his moronic trade policy stunts on tariffs.
    bshank
  • Reply 19 of 33
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    They were bearish when the shorts were big to meet those price points. Now that that won't work in their favor due to Apple making it impossible they have to be bullish because Apple has righted their ship, even amidst the idiot in chief and his moronic trade policy stunts on tariffs.
    “Idiot in chief”? His policies are working. If they weren’t, the “end of the world” claims his opponents made before he was elected would’ve already happened. What matters is performance, not likability. And in that respect, he has exceeded all expectations. I could care less if people feel hatred or warm and fuzzies when they talk about him.
    edited October 2019
  • Reply 20 of 33
    AppleExposedAppleExposed Posts: 1,805unconfirmed, member
    Rayz2016 said:
    lkrupp said:
    Why are so many analysts suddenly positive about AAPL? AAPL has been surging this year. Something smells fishy. Pump and Dump before Oct 30 quarterly report? This certainly doesn’t jive with the resident experts here on AI who are saying just the opposite.
    No, not pump and dump.

    Drive the price high by creating unrealistic expectations.
    Borrow a load of shares and then sell them. 
    Then put out loads of bad news to crash the share price.
    Buy back the shares at a lower price. Give back the shares to the mug who lent them to you.
    Pocket the difference.
    Can't remember the name for that. Anyone?

    "Short selling" I think? I still don't understand why a mug would lend shares out. Seems risky to both parties especially considering you may not get them back if the price skyrockets. Maybe this has happened causing analysts to trash Apple?


    spice-boy said:
    Wow just checked out the comments forum a Mac Rumors on a story about Tim Cook. Those guys are even bigger homophobes than AI readers. If you doubt me notice how AI never opened the comments option on its story about Cook and "coming out". 

    It's MACRUMORS where idiots around the world bash anything Apple. Tim Cook could announce he's straight and they'd all turn gay and bash him anyway.

    I believe AI disabled comments because people, myself included, don't like Tim injecting his personal politics into a tech company. I don't see homophobic comments on AI but lots of these.
    edited October 2019
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