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Relative to Apple’s conservative guidance on its last earnings call, Chatterjee sees near-term estimates as better than expected. Better supply chain dynamics will “overwhelm” moderate demand weakness, and despite Apple warning of a quarterly revenue hit of the order of $4-8 billion, his forecast is now in line with sell-side consensus, but better than buy-side expectations.
Wall Street forecast Apple’s June quarter revenue to hit $82 billion, roughly in line with Chatterjee’s forecast of $82.1 billion. However, his forecast is above the lows and buy-side estimates, which hover in the $78 billion range. For example, product segments other than Macs may not be affected by supply headwinds. Also, according to his estimates, the hit to revenue will be less than the low end of the $4 billion to $8 billion range previously estimated.
Chatterjee, on the other hand, has trimmed his revenue and earnings forecasts for Apple slightly after nearly a quarter. Mac and iPad growth is likely to be lower as consumer spending softens, he noted. This revision could be offset by Apple’s pricing power and ability to buy back stock. Overall, he thinks Apple’s stock price is capable of outperforming gains.
The analyst maintained his 12-month Apple price target of $200, which is based on a price-to-earnings multiple of 30 times his 2023 earnings estimate of $6.73.