Apple set to beat Q3 expectations – Evercore

Evercore analyst Amit Daryanani expects enable Apple to, at a minimum, meet Wall Street consensus expectations that are looking for some 1.4% growth for the company’s fiscal third quarter.

At the end of April, Apple CFO Luca Maestri provided some points of guidance for Q3 (June quarter):
We believe our year-over-year revenue performance during the June quarter will be impacted by a number of factors. Supply constraints caused by COVID-related disruptions and industrywide silicon shortages are impacting our ability to meet customer demand for our products. We expect these constraints to be in the range of $4 billion to $8 billion, which is substantially larger than what we experienced during the March quarter. The COVID-related disruptions are also having some impact on customer demand in China.
With respect to foreign exchange, we expect it to be a nearly 300 basis point headwind to our year-over-year growth rate. Additionally, we paused all sales in Russia during the March quarter. This will impact our year-over-year growth rate by approximately 150 basis points. Specifically related to services, we expect to continue to grow double digits but decelerate from our March quarter performance due to some of the factors I just described.
Philip Elmer-DeWitt for Apple 3.0:

From a note to Evercore clients that landed on my desktop Wednesday:
While investors continue to worry about impacts from high inflation to iPhone demand, we think AAPL has guided June-qtr conservatively enough that despite the mixed data points we should see another beat (though perhaps more modest vs. prior ones) for June-qtr. The bigger focus will be Sept-qtr guide that we suspect could qualitatively be below current expectations given a challenging f/x environment and evolving macro situation. While we are maintaining our June-qtr expectations we are lowering our Sept-qtr estimates to $88B/$1.28 (street at $90.3/$1.32); our updated model implies 7% q/q growth (vs. historical seasonality of 13%)…
We think Apple’s messaging on June-qtr revenue was sufficiently conservative to enable Apple to at minimum meet street numbers that are looking for ~1.4% growth. Apple did not provide June-qtr revenue guidance but they did flag multiple headwinds… Apple has tended to overestimate supply headwinds over the past few quarters, so we think it is possible the supply and FX issues are less severe than Apple assumed. It is unlikely Apple will choose to provide a Sept-qtr revenue guide, but we should get some qualitative commentary.

MacDailyNews Note: Daryanani maintains Evercore’s “Outperform” rating and $180 target for Apple shares.
Apple is scheduled to report third fiscal quarter results on Thursday, July 28, 2022 after market close. As always, we’ll have the results for you as soon as they are available that day right around 1:30pm PDT / 4:30pm EDT.
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