Morgan Stanley slightly pessimistic about Apple in Q1 2023

Apple store logo

Given lower-than-usual iPhone shipments, Morgan Stanley is in consensus on Apple’s Q1 2023 results.

In a note to investors released Tuesday, Morgan Stanley believes Apple will report $122.8 billion in revenue, up from its previous forecast of $120.3 billion. This puts Morgan Stanley just 1% above the consensus estimate of $122.1 billion.

Analysts attribute the quarterly change to “better-than-expected product deliveries” for iPads and Macs and “slightly outperforming services.”

For the iPhone, shipments of 75.5 million units are forecast down 11% year-over-year, but while builds indicate total shipments are 4 million ahead of analysts’ estimates, build times are ” very busy back-end, given the improvement in production at the end of the quarter. Zhengzhou.

With an unchanged $916 estimated ASP for the iPhone, Morgan Stanley predicts iPhone revenue of $68.9 billion, down 1% from consensus and down 4% year-over-year.

For iPad, revenue forecast increased 9% to $8.5 billion, up 18% year-on-year due to increased shipments to $20 million from $18 million. Mac revenue rose 12% to an estimated 9.8 billion dollars, with a similar increase in shipments to 7.2 million units from 5.5 million

Wearables, Home & Accessories will be ‘below seasonal’ expectations as despite the launch of new AirPods and Apple Watch products, ‘we believe wearables are more susceptible to the broader downturn we’re seeing in consumer electronics spending “.

Services revenue is projected at $20.9 billion, up 7% from last year.

In March, Morgan Stanley believes demand in the consumer electronics market will be felt, but Apple’s results show “the company is more immune to these issues.” Although March quarter revenue and earnings per share were down due to lower iPad builds and “some reduction in channel Mac inventory,” this is supported to some extent by expected higher earnings from the iPhone.

The March quarter is now valued at $97.5 billion versus Wall Street’s forecast of $98 billion.

Despite the decline for the quarter, the target price is still $175 and the stock is still the “best bet.”

Apple will host an investor call on Thursday, February 2 at 2:00 pm PT and 5:00 pm ET.