Apple Q4 Earnings Preview: Focus on iPhone 16 Demand and Analyst Expectations

Apple Inc AAPL is set to release its fourth-quarter financial results after the market closes on Thursday, with particular attention on the performance of its iPhone 16 and new product launches.

Earnings Estimates: Analysts project that the Cupertino, California company will report a fourth-quarter revenue of $94.56 billion, an increase from $89.5 billion reported in the same quarter last year, according to data from Benzinga Pro.

Apple has successfully surpassed analyst revenue estimates for six consecutive quarters and has exceeded expectations in nine out of the last ten quarters.

Earnings per share: Analysts anticipate that Apple will announce an earnings per share (EPS) of $1.53, which is an increase from $1.46 reported during the last year's fourth quarter. Just like its revenue, Apple has also beaten EPS estimates in six straight quarters and nine of the last ten quarters.

Analysts’ Observations: The demand for the iPhone 16 is highly anticipated and will be a focal point during the earnings report and subsequent conference call. Goldman Sachs analyst Michael Ng noted that the demand for the iPhone 16 has remained stable year-over-year and appears better than expected, citing shorter lead times compared to last year and reduction in production cuts.

Ng has maintained a *Buy* rating on Apple, setting a price target of $275. He also mentioned that Apple's involvement in artificial intelligence (AI) with Apple Intelligence could be a significant factor driving future demand.

Another important aspect analysts will monitor is Apple's Services segment, which could potentially be undervalued by investors. Ng suggests that growth in Apple's installed base, combined with the expansion of its services and innovative product development, may counterbalance cyclic setbacks in hardware sales.

On the other hand, Morgan Stanley analyst Erik Woodring indicated that shorter lead times for the iPhone 16 could suggest weaker demand. He holds an *Overweight* rating with a price target of $273, adding that while the data may seem disappointing, it indicates improvement since the prior generation's release.

Woodring believes that Apple's proactive approach in managing inventory levels may also play a role in shorter lead times, implying that improved supply conditions have likely contributed to this situation.

Analyst Ratings Overview: Recent ratings for Apple from various analysts include:

• KeyBanc: Downgraded to Underweight with a $200 price target
• Piper Sandler: Reiterated Neutral with a $225 price target
• Bank of America: Reiterated Buy with a $256 price target
• Barclays: Maintained Underweight with a $186 price target

Key Areas of Focus: When Apple reports its fourth-quarter results, investors will be keeping a close watch on several key areas:

• The iPhone 16
• Performance of the Services segment
• The initial rollout of Apple Intelligence and its impact
• Trends in China

In the previous quarter, Services revenue reached an all-time high, although it fell below market expectations. Additionally, weakness in the Chinese market during the last quarter exerted downward pressure on Apple's stock following its earnings announcement.

Recent AI product announcements from Apple might also be featured in the report as potential future growth drivers.

Stock Performance: On Wednesday, Apple’s stock saw a decline of 1% to $230.38, meeting a 52-week trading range of $164.08 to $237.49. Year-to-date, Apple shares are up approximately 24% in 2024.

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• Apple CEO Tim Cook Highlights Impact of New AI Technology on Consumer Electronics

Apple, Earnings, iPhone