Sell-side Analyst Estimates: Apple's December Quarter

Posted: Jan 27 2014, 10:25am CST | by , in News | Technology News

Sell-side Analyst Estimates: Apple's December Quarter
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Apple reports its December quarter results after the close. I have complied estimates and thoughts from ten sell-side analysts along with a link to Fortune reporter Philip Elmer-Dewitt’s note where he has estimates from 29 sell-side and 18 independent analysts. There are no analysts at or below Apple’s revenue guidance of $55 billion with 6 of the 29 sell-side analysts above the $58 billion high-end. While Apple did not give exact EPS guidance I have estimated that based on the details the company provided that it ranges from $12.95 and $14.24. (Note that my family and I own Apple shares).

Sell-side analysts EPS range from $13.49 to $15.00

While there is only an 8% range by the sell-side analysts for Apple’s revenue with a low of $55.4 billion and a high of $59.88 billion (Street is at $57.5 billion and right in the middle of guidance) their EPS range is a bit wider at 11% with $13.49 at the low-end (Mark Moskowitz at JP Morgan) and $15.00 (Kulbinder Garcha at Credit Suisse). These compare to an average Street estimate that is $14.09.

I am towards the high-end of estimates for both revenue and EPS with $59.8 billion in revenue, 37.4% gross margin and $14.64 in EPS.

Timothy Arcuri at Cowen (revenue at high-end of guidance and above Street EPS)

“Expect revenue of $57.6 billion and EPS of $14.26, or at the high end of $55-58 billion guide and slightly above street $14.04. Regarding units, we model iPhones at 55 million and iPads of 22 million both of which are in-line with Street and some potential for units and gross margin to be slightly better.“

“Expect March quarter revenue guidance of $45.0 billion and EPS of $9.99 vs. the Street’s $45.9 billion and $10.93 on iPhone/iPad units of ~39 million/~20.5 million respectively, both a touch below Street. While Street numbers for March are biased more to the downside (especially considering AAPL is likely to give itself some room in guidance), we think the buyside is already expecting units in the range of our numbers. If the stock gets hit on guidance, we would be aggressive buyers.”

Keith Bachman at BMO (revenue at mid-point of guidance and below Street EPS with upside)

Bachman is projecting $56.5 billion and EPS of $13.72, which is below consensus but with potential upside to reach consensus or modestly better. He is estimating 55 million iPhones and 25 million iPads.

“This time last year, Apple faced meaningful ASP pressure owing to the iPad Mini. However, this year we think Apple has upside potential versus our estimate owing to a positive ASP impact for both iPhones and iPads. For example, our current estimates assume a 1% q/q increase in iPhone ASPs to $581 for the Dec Q. We believe that actual ASPs could be roughly in the $590 to $595+ range for the Dec Q, which could add another ~$700 million in revs, help on gross margins (mix), and add~$0.40 in EPS compared with our existing estimates. We have assumed a $35/unit q/q increase in iPad ASPs for the Dec Q, which we think is reasonable.”

Katy Huberty at Morgan Stanley (revenue near high-end of guidance and below Street EPS)

“Apple is likely to report revenue near the high-end of its $55-58 billion guidance range, close to our model of $57.2 billion and consensus of $57.4 billion. We expect iPhone shipments of 54-55 million, near our model of 55 million and consensus about 53 million. iPad shipments as high as 26 million could drive potential revenue upside vs. our model and consensus of 23 million.”

“Average selling price (ASP) could also come in slightly better than expected due to higher iPhone 5s and iPad Air mix. We model iPad ASP up 6% Q/Q in December quarter compared to down 8% a year ago, despite the higher deferred revenue. We model gross margin of 37.3%, near the mid-point of guidance of 36.5-37.5%, and EPS of $14.01.”

Brian Marshall at ISI Group (revenue high-end of guidance and above Street EPS)

Marshall is estimating December quarter revenue of $57.7 billion, gross margin of 37.2% and EPS of $14.14. He is projecting 54 million iPhones and 25 million iPads.

“We believe overall iPhone sales remain robust despite some signs that iPhone 5c sales may have been less than forecast (e.g., JBL commentary, etc.). In our view, continued strength of the 5s highlights the power of AAPL’s franchise and solid position at the very high-end of the smartphone market. After many months of speculation and delays, we look for the beginning of iPhone sales at China Mobile (CHL) to offer a boost to Mar-14 guidance (e.g., potential for 5-10% EPS accretion to CY14 EPS not factored into our current forecast).”

Steve Milunovich at UBS (revenue above guidance and well above Street EPS)

“Apple should have a solid F1Q report, perhaps beating our above-consensus estimates of $58.6 billion in revenue, a 37.1% gross margin, and $14.42 in EPS. We expect unit shipments of 55 million iPhones, 25 million iPads, and 4.5 million Macs. For the March quarter, we estimate revenue of $47.3 billion, a gross margin of 37.7%, and EPS of $11.44.”

Mark Moskowitz at JP Morgan (revenue below mid-point of guidance and below Street EPS)

Moskowitz raised his estimates fiscal 2014 and 2015 estimates on December 18 but kept his December quarter estimates the same with revenue of $55.9 billion and EPS of $13.49. He is expecting 53 million iPhones and 24.75 million iPads.

“A key driver behind our earnings revisions relates to the iPhone 5S. In our view, this upgrade cycle is likely to be much bigger than the prior transition from the 4/4S to the 5. We think the spec improvements on the 5S are significant enough to spur users to upgrade from the 4 and 4S after passing on the 5. We also believe Apple’s greater market coverage at launch with the 5S is likely to translate into incremental upside potential in the model. These factors could translate into two to three quarters of upside potential to iPhone unit estimates.”

Gene Munster at Piper Jaffray (towards the high-end of revenue guidance and below Street EPS)

Munster is projecting December quarter revenue of $57.25 billion and EPS of $13.92 driven by 55.5 million iPhones and 24.5 million iPads.

The following is what Munster believes investors are looking for in the December quarter:

• Revenue ~$58 billion

• EPS ~$14.35 (implies 37.5% gross margin)

• iPhone 56-57m (we don’t expect any China Mobile units in Dec-13)

• iPad 24-25m

• Mac 4.6m

• GM 37.5%

Andy Perkins at Societe Generale (revenue and EPS below Street estimates)

“Our recent market checks indicate that the worldwide handset market remained strong in the December quarter with data pointing to worldwide handset volumes up 10% year over year. Usually we would expect Apple to outperform the market in the December quarter as the company has just issued new products. However, our research suggests that volumes may come in below expectations.

“We are now looking for 52 million units for the final quarter of 2013. We also believe that the 5s model is selling substantially better than the 5c handset with Apple selling roughly four 5s units for every 5c unit sold. With the lower prices 5c model in the mix, our assumed ASP for Q1 FY14 is 4% lower than the previous year. This gives a sales forecast of $55.4 billion, gross margin of 37.2% and EPS of $13.50.”

Aaron Rakers at Stifel (revenue above mid-point revenue guidance and EPS below Street)

Rakers estimates revenue of $57 billion and EPS of $13.92.

“Apple guided F1Q14 revenue to be in the $55-$58 billion range with gross margin between 36.5%-37.5%; however, including a ~1.5pp negative impact from a ~$900M increase in deferred revenue (reflective of decision to offer OS X Mavericks and iLife/iWorks for free). Apple increased the amount that it defers per iOS by $5 per device to $15-$20 per device and Mac from $20 per device to $40 per device. Apple also pointed to a higher iPad mix with higher costs (emphasizing focus on working down the cost curve), and impact of the Yen and higher costs for the new iMac and MacBook Pro line-ups.”

Maynard Um at Wells Fargo (revenue at high-end of guidance and EPS above Street)

Um downgraded Apple from Outperform to Market Perform on January 2. He wrote in his note “We believe the holidays may have been a strong one for Apple driven by iPad mini, iPad Air and iPhones, which could drive unit upside. We forecast 24 million iPads and 54.8 million iPhones and note that every 5 million iPads equates to $0.37 in EPS and 5 million iPhones $1.10, all else equal. Um is estimating revenue of $58 billion and EPS of $14.49

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

Source: Forbes

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