Apple iPhone Shipments Rebounding This Year Appears Doubtful, According to Cowen Analysts
Apple is expected to release its quarterly results in the near future and while the company’s shares have risen nearly twice as much as the rest of the stock market, it remains to be seen if this trend will continue. An investor note from the financial services company Cowen states the March quarter results are expected to highlight another dark tale for Apple’s primary revenue generating product; the iPhone.
Cowen Raises Apple’s Stock Price Targets While Highlighting the Struggles Ahead
For the upcoming quarter, Cowen foresees a 10 percent quarter-on-quarter revenue slide, although compared to the yearly average decline of 14 percent, that would actually be an improvement. For the March quarter, the investment bank predicts revenue of $57.9 billion and an EPS of $2.38, while for the June quarter, it speculates revenue of $52.1 billion and EPS of $2.03.
The note implies that the recent outperformance in the stock market can be attributed to the optimism around the Services business and the resumption of the relationship with Qualcomm, which guarantees a 5G iPhone in 2020. For the positive sentiment to last, Cowen says that the stabilization of iPhone demand trends and continued momentum in the Services category would be required.
Since iPhone sales have been declining in recent times, Apple is trying to focus more on its services business to generate revenue from current iPhone users. In March, the company announced subscription services such as Apple TV+, Apple News+, and Apple Arcade. The Cupertino giant is vague on the details right now and the services are not expected to make a debut until fall.
The note further says that in order to compete with the likes of Huawei and Samsung, Apple would either have to introduce innovative features or revise its pricing strategy. Compared to the previously expected revenue of $11.6 billion from the Services segment, Cowen says it’s more likely to be around $10.4 billion as the analysts believe that weaker demand for the iPhones has also impacted the consumption of services. However, Cowen forecast the Services to display growth of 9 percent in the upcoming quarter and generate revenue of $11.4 billion.
Despite its reservations, the investment bank has termed Apple as a stock that will overperform. This is in line with the predictions of other prominent research firms, including Wolfe Research, UBS, Goldman Sachs, and others. Apple is expected to post its quarterly results on April 30, so we’ll see how well the company has performed. Of course, the technology giant won’t disclose how many iPhones it sold, but with the revenue and profit figure, we’ll be able to paint an estimate.