Apple Again Inches Toward $3 Trillion. Up Next Are Earnings and AR Glasses.

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Evercore ISI analyst Amit Daryanani says an Apple AR or VR product could have a growth trajectory similar to that of the Apple Watch.

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Feline Lim / Getty Images

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Apple’s next earnings report is now only two weeks away, and Wall Street has begun to adjust its forecasts for how the numbers will turn out.

As the stock continues to flirt with the $3 trillion valuation mark, there is growing confidence that Apple (ticker: AAPL) can deliver better-than-expected results for the December quarter and provide strong guidance for the March quarter. could. And anticipation is growing for the launch of a key product category from Apple: glasses and headsets for augmented and virtual reality.

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Shares of Apple have risen nearly 15% since Apple reported its September quarter results, with the S&P 500 rising only 3% in the period, JPMorgan analyst Samik Chatterjee said in a research note on Thursday. He says the rally reflects strong earnings expectations, driven primarily by a better-than-expected iPhone 13 sales cycle. Chatterjee believes that the December quarter results will marginally beat expectations despite supply chain constraints.

For the December quarter, Chatterjee sees revenue of $119 billion and profit of $1.94 per share, slightly ahead of Wall Street’s consensus call of $118 billion and $1.88 per share.

Management’s financial forecast will be key to how the stock will perform post the results, he added. Their March quarter estimate calls for revenue of $95 billion and profits of $1.50 per share, well above consensus calls for $90 billion and $1.33. For the September 2022 fiscal year, their model calls for revenue of $382 billion and profits of $5.95 per share, while the consensus is $382 billion and $5.73 per share.

Chatterjee’s call is compounded a bit by the fact that Apple stopped providing detailed quarterly guidance at the start of the pandemic and has not resumed the exercise. On the most recent earnings conference call, CFO Luca Maestri cautioned that the company would see a bigger impact from the supply crunch in the December quarter than in the September quarter. He also said the company was expecting “very solid” growth in the quarter, with year-over-year growth in all other regions except the iPad, where he forecast a sales impact from supply constraints.

Chatterjee reiterated the overweight rating on the stock with a price target of $210. As of Thursday morning, Apple was partially at $175.60, giving it a market capitalization of $2.87 trillion.

Evercore ISI analyst Amit Daryanani also reiterated an outperform rating on Apple shares, while raising his target price from $200 to $210, a call he made for a deep-dive on the outlook for the company’s prospects in augmented and virtual reality. was done as a part. Market. There are widespread expectations that Apple will unveil a move into the AR/VR market later this year, and Daryani thinks the news will serve as a catalyst for Apple shares.

He thinks that the product—specs, an Oculus-style headset, or both—might have a similar growth trajectory as the Apple Watch business. It could generate $18.1 billion in sales and 19 cents per share in profits in the fifth year after launch. In a more bullish scenario, he added, the impact could be $38 billion in sales and profits of 41 cents per share.

Daryani thinks AR/VR glasses will have specific uses—gaming, media and communications—and won’t be designed to be worn all day. The devices will run on chips designed by Apple and a new Apple operating system, and will sell for $750 or more, he predicted.

Eric J. Write Savitz to [email protected]

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