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June 20, 2024
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Apple’s stock sentiment has been sour, but there may be a silver lining


Published: Jan. 19, 2024 at 8:39 a.m. ET

Apple’s stock has been dogged by various concerns this year, from a looming antitrust lawsuit to a fight over Apple Watch sensors to pressures in China. Could there actually be a silver lining for investors in all the skepticism?

Evercore ISI analyst Amit Daryanani seems to think so, noting that buy-side expectations are likely below the consensus view for the most recent quarter. That means that if Apple AAPL can even just meet consensus projections for its latest quarter, the stock could move higher, “especially if Apple…

Apple’s stock has been dogged by various concerns this year, from a looming antitrust lawsuit to a fight over Apple Watch sensors to pressures in China. Could there actually be a silver lining for investors in all the skepticism?

Evercore ISI analyst Amit Daryanani seems to think so, noting that buy-side expectations are likely below the consensus view for the most recent quarter. That means that if Apple

AAPL

can even just meet consensus projections for its latest quarter, the stock could move higher, “especially if Apple can point to continued solid iPhone performance in China.” And Daryanani himself predicts the company will show “modest upside” in its results.

Daryanani opened a tactical outperform call on Apple’s stock Friday morning, ahead of the company’s December-quarter earnings report, which is due out Feb. 1. He’s bullish on the stock over the long term as well, but the tactical call reflects targeted optimism about a near-term event, in this case the earnings report.

See also: Apple’s stock could soar nearly 25%, BofA says, going against tide of skepticism

While Apple faces competitive and economic headwinds in China, Daryanani thinks the company has various cushions that could help offset those pressures. For one, the company has been winning market share in various emerging markets. And in more developed countries, it’s seeing the average selling price of iPhones go up.

Read: Apple just ceded one crown to Microsoft, but it picked up a new one

Those positive trends likely helped iPhone revenue stay at stable levels in the December quarter, he wrote, and could help in March as well.

Daryanani said that investors appear cautious as well about the company’s high-margin services business, though he thinks the company will be able to maintain growth at a high-single-digit or low-double-digit rate, helped by rising payments from Google related to search and continued momentum for the App Store.

Then there’s the potential for a large-scale antitrust investigation from the Justice Department, which has been the subject of recent reports. The topic “comes up a lot with investors, but we do not think Apple will comment on this on the earnings call,” he wrote.

And while the company faced some disruptions to its Apple Watch business late in the quarter amid a patent dispute over a sensor, Daryanani expects the issue to have “minimal impact” on December-quarter results given that a ban was only in place for a short window during that period. It was recently reinstated.

One other things to monitor during earnings will be early indications of demand for the company’s Vision Pro headset. Preorders for the $3,499 mixed-reality device just kicked off, so sales didn’t factor into the latest quarter, but Apple executives might drop some nuggets during the earnings call.

Apple shares were edging 0.7% higher in premarket trading Friday after rising 3.3% in Thursday’s regular session on the heels of a BofA Securities upgrade. The stock is off about 2% to start 2024.



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