Apple's $111.4 billion quarter - which analysts were right and which were wrong

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in AAPL Investors edited January 31
In the wake of Apple's stellar holiday quarter results, analysts have been quick to respond to the $111.4 billion in revenue and other data points Apple raised in its financials. Here's what the analysts think of the results -- as well as how far out they were in their predictions.




Apple's first-quarter earnings for 2021 were revealed on January 27, with the iPhone maker securing record-breaking revenue from sales over the holiday season. As well as achieving $111.4 billion in revenue, the company saw massive growth across all product categories, with considerable year-on-year growth observed for the iPad and Mac segments.

Ahead of the results, analysts offered their predictions of what to expect from the company in its quarterly disclosure, and all were extremely positive in their expectations. Naturally, in the days after the results announcement, analysts returned to their keyboards to offer their hot take on what Apple earned.

Cowen

Cowen deemed the results to be "well above consensus forecasts" with robust year-on-year growth from all hardware segments, and a standout gross margin "given higher shipments and favorable iPhone 12 Pro/Max mix." Based on comments on upgrader and switcher trends, as well as the slower rollout of 5G in Europe and Latin America, Cowen thinks the 5G cycle can be a "long and strong one."

Apple's quarterly revenue and net profit
Apple's quarterly revenue and net profit


It estimates iPhone shipments were around 80 million, more than its 77 million forecast, with a 6% higher YoY blended average selling price. China was a tailwind for the quarter, due to the "pent-up demand," while India could be a "material driver of units in the long term" due to how it "feels like China 8-10 years ago, with a nascent developer ecosystem and lack of retail stores."

In its pre-results forecast, Cowen thought Apple would reach $104.5 billion for the quarter, with iPhone revenue at $60 billion and Services revenue at $16 billion. In reality, iPhone revenue hit $65.6 billion, while Services managed $15.8 billion.

Wedbush

Characterizing the results as a "jaw dropper," Wedbush deemed Apple's results to be "well above even the most bullish whisper numbers." The success of the iPhone 12 was "Usain Bolt-like," and is well on the path to meet "supercycle hype."

"Based on the underlying strength of the iPhone 12 5G sypercycle with China growing 57% YoY, the reality has even exceeded the hype with Cook & Co. delivering a product cycle for the ages that will help transform Apple into its next phase of growth," the analysts believe.

Quarterly iPhone revenue
Quarterly iPhone revenue


China demand is a "linchpin" for the supercycle, with estimates that 20% of iPhone upgrades will stem from the region in the coming year. Apple's march to a $3 trillion market cap is also "firmly on track" to happen in the next year, with a "massive services business worth $1 trillion" potentially becoming a catalyst for share activity for the coming quarters.

The forecast expected "eye-popping" iPhone shipments in the low-to-mid 90 million range, with overall revenue of $100.2 billion.

Loup Ventures

The narrative for Loup Ventures was that the results showed an "accelerating digital transformation" for the company and society, with the upside "driven by nearly every product category" aside from the supply-constrained Mac segment. "Further evidence of this transformation is the company reporting historic revenue during a time of historic financial stresses for consumers."

It believes Apple's "best days are still head" because of a digital transformation "that we cannot yet fully comprehend." This acceleration will continue to affect 2021's revenue, with more people used to working, learning, and playing at home, providing a "continued tailwind" for iPad and Mac that could grow 10% or more in 2021 and 2022.

Apple's quarterly Services revenue
Apple's quarterly Services revenue


Services growth benefiting from "pandemic-related consumer habits" will enjoy the extra tailwind for the better part of 2021, in theory. Meanwhile, enthusiasm for 5G will "grow in the back half of the year," to start a two-year or three-year iPhone upgrade cycle.

Loup Ventures predicted revenue of $109.5 billion, with iPhone up to $64.9 billion, iPad at $8 billion, Mac at $10 billion, Wearables up 17% YoY, and Services at $15 billion.

Morgan Stanley

Following Apple's results, Morgan Stanley raised its price target for the company to yet again $164, with highlights in the results including "faster iPhone share gains, installed base growth, and services monetization." These elements, as well as continued remote work and education and an updated product lineup, could provoke double-digit growth for several quarters.

An acceleration of Apple's installed base growth from 7% to 10% and services monetization, along with the China market's recovery, also indicate overall faster growth in the long term.

Apple's quarterly revenue from Greater China
Apple's quarterly revenue from Greater China


For the March quarter, seasonal growth is implied for iPhone, iPad, and Mac, with an improved Services forecast due to it outperforming in the Q1 quarter.

Ahead of the results, Morgan Stanley raised its price target from $144 to $152, as well as predicting revenue of $108.2 billion, 78 million iPhone shipments, and $63.9 billion in iPhone revenue.

Comments

  • Reply 1 of 10
    A broken clock is right twice a day.
  • Reply 2 of 10
    geekmee said:
    A broken clock is right twice a day.
    Not when the hands are missing.
    Rayz2016
  • Reply 3 of 10
    Stuff Apple's results down Goldman Sachs' Rod Hall's throat and let him digest them.  It was kind of him to raise Apple's price target from $80 to $83.  Investors will surely love that huge increase.  It's strange how a company that makes $111B in revenue for a quarter is only worth a $3 increase in the share price.  I'm very interested in what long-term stocks Rod Hall recommends to his clients that are superior to Apple.  Maybe stocks like Roku and Spotify?

    Apple did pretty well for the holiday quarter although I'm sure many Apple shareholders aren't pleased with Apple's falling share price after the earnings report.  That drop might be good for Apple to buy back more stock and get rid of plenty of outstanding shares.  17B outstanding shares is really a huge number.  Too many, if you ask me.  I wonder how that number of shares compares to other tech companies.  I can only trust Apple knows what it's doing.
    Bart Ywatto_cobra
  • Reply 4 of 10
    chasmchasm Posts: 2,391member
    It's always fun to speculate on how well Apple will do in a given quarter, but as a reminder, the companies listed above all do this professionally. They are paid big bucks to supply the most accurate information possible to investors. Despite this, most of them did worse than your average interested Apple fan.

    I really appreciate that this AI article documents how off-base some of the big players were. The majority of analysts, as reported by Philip Elmer-DeWitt, came to a consensus estimate of around $105B, meaning the vast majority were well below the actual figures, and his handy chart makes it pretty obvious which of the analysts have a clue on Apple (Katy Huberty, Tony Sacconaghi, and Samik Chatterjee) and which ones don't (most everyone else, especially the nitwit Harsh Kumar).

    If this was just a group of enthusiasts guessing, that would be one thing -- but year after year after year, the other analysts are paid handsomely to do the work and research and come up with something that isn't way off base, and yet most of them do. How do they (and "throw a dart" guessers like Gartner and IDC) keep their jobs and credibility? Why aren't they replaced with competent analysts that understand Apple's business and its customers?

    More importantly, how can I get a cushy job with no performance metrics but plenty of money like that? :lol: 
    edited January 31 watto_cobra
  • Reply 5 of 10
    While the AI graphs are interesting, I think that showing a 4 quarter moving average line would provide clearer information on the overall trends because of the seasonal nature of the data,
    aderutterwatto_cobra
  • Reply 6 of 10
    Bart YBart Y Posts: 36unconfirmed, member
    “I'm sure many Apple shareholders aren't pleased with Apple's falling share price after the earnings report.  That drop might be good for Apple to buy back more stock and get rid of plenty of outstanding shares.  17B outstanding shares is really a huge number.  Too many, if you ask me.  I wonder how that number of shares compares to other tech companies.  I can only trust Apple knows what it's doing.”
    Well, that 17B shares is because AAPL share price had continued to rise over the years and became very “expensive” per share.  Splitting the shares makes the resulting shares “more affordable” psychologically to retail investors.

    At $134 today, before Aug 2020 4:1 split the shares would be $536/share but outstanding share count would be 4.25B shares.  If we go back to the June 2014 7:1 split, the total shares would be 607M shares but the share price would be an astronomical $3752/share!  

    Apple got tremendous bargains buying back shares early on because Apple bet on itself - it knew their business model was sound and share prices would reflect that eventually.  Consider if you had bought $10,000 worth of AAPL stock in early 2014 you would have 28x that amount now or $280,000 now, disregarding dividend or reinvestment.

    Even today, Apple still feels itself undervalued so will continue buying back shares of those shareholders who wish to sell their shares, directly putting money back to shareholders.  To shareholder who continue to hold, their % of ownership goes up as shares go down, and price goes up as the supply of shares drops.
    watto_cobra
  • Reply 7 of 10
    MacProMacPro Posts: 19,380member
    The ones that got it wrong obviously can't draw a straight line!  
    watto_cobra
  • Reply 8 of 10
    17B outstanding shares is really a huge number.  Too many, if you ask me.  I wonder how that number of shares compares to other tech companies.  I can only trust Apple knows what it's doing.
    Apple is buying back a lot of shares, five years ago there were roughly 22B outstanding shares.
    watto_cobra
  • Reply 9 of 10
    Apple & Tim Cook team should expand holograms which are an extension of augmented reality , Apple has most of the hardware in place,  to upgrade with software & photons . Holograms are the new frontier of entertainment & information .
  • Reply 10 of 10
    crowleycrowley Posts: 8,730member

    Apple did pretty well for the holiday quarter although I'm sure many Apple shareholders aren't pleased with Apple's falling share price after the earnings report.  That drop might be good for Apple to buy back more stock and get rid of plenty of outstanding shares.  17B outstanding shares is really a huge number.  Too many, if you ask me.  I wonder how that number of shares compares to other tech companies.  I can only trust Apple knows what it's doing.
    Too many in what sense?  I'm not aware of any particular downside to having a large number of shares issued.
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