Apple well-positioned to weather consumer spending headwinds, analyst says

in AAPL Investors
Reduced consumer spending is acting as a headwind for Apple's new iPhone SE models, and could affect the company's iPhone 13 and Services segments, according to JP Morgan.

iPhone SE 3
iPhone SE 3

In a note to investors seen by AppleInsider, JP Morgan analyst Samik Chatterjee says that his firm is taking a more cautious view on consumer spending amid reports that demand is waning in the electronics segment.

As a result, Chatterjee is moderating his growth forecasts for the smartphone market, limiting upside from the launch of the new iPhone SE. The same wane in growth could also limit upside for the iPhone 13 and App Store.

"Thus, we are trimming our earnings forecasts for Apple, led by a modest haircut to our revenue growth estimates for iPhone (primarily iPhone SE) and Services, although the overall reduction in estimates is fairly modest given the resilience of high-end smartphones, tablets and laptops to the broader slowdown in consumer spending," Chatterjee writes.

The analyst's new numbers are not far off from his previous estimates. His forecast for 2022 clocks in at 245 million iPhone shipments, down slightly from the previous estimate of 250 million. Chatterjee says that his iPhone SE estimates now stand at 24 million units, down from 30 million prior.

Slower engagement on the App Store could also limit services growth to the 15% to 20% range in 2022. That's based on lower growth in new downloads, total revenue, and gaming revenue.

Despite the headwinds, Chatterjee still believes that Apple "should drive offsets through market share increases." He says Apple is still well-positioned to still deliver resilient performance in product revenue growth because of market share gains.

Chatterjee is maintaining his 12-month Apple price target of $210, which is based on a profit-to-earnings multiple of 30x and a calendar year earnings estimate of $6.90.

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