While Jefferies analysts see a "quiet quarter" for Apple (NASDAQ:AAPL), they are using the opportunity to raise their price target by 16% to $225 from $210 ahead of the results. The firm also maintained a Buy rating.
"After June in which Apple set out its long term vision of computing, this earnings call will bring us back to the reality of iPhone and services being the two most important drivers of the stock," analysts commented. "Both are likely to show enough resilience to drive an inline to slightly better quarter."
The firm sees revenue for the quarter of $83.6 billion, versus the consensus of $81.6 billion.
On hardware, the analysts see revenue flat with iPhone flat, iPad down, Mac up on units compensating for lower ASP, and wearables slightly down.
“All in all, we expect a benign quarter. It is worth noting this is off an easier comp as a year ago, mgmt called out supply constraints creating a headwind to hardware sales of $4-$8B for the June quarter. This flips to a more difficult comp in the September quarter. Here we model a 5% y/y decline,” analysts commented.
For Software, they said while they don't think mid-teens growth is sustainably achievable, they do see enough options to keep service revenues growing a reliable high-single digits.
Overall, the analysts said while Apple is “boring” and lacks the AI “pizzazz”, it makes up for it with “consistency”.
“Its moat has been, remains, and will be its ability to integrate software services with its hardware that builds a regular replacement cycle, ability to slowly raise prices, and take share,” the analysts added. “This consistency is what makes it a buy-rated stock - especially in an uncertain economic environment.”
Apple is scheduled to report its fiscal third-quarter results on August 3rd, after the market close.