Evercore forecasts 'modest upside' for Apple's holiday quarter

Apple's first-quarter results should provide modest upside' for investors, a note from Evercore analysts believes, with continued high Services growth and risk in China at the forefront of investor thoughts for the company.

Apple's holiday quarter earnings will be announced on February 1, and will detail the finances of the iPhone maker during its typically busy period. In a pre-results note to investors seen by AppleInsider, the results should be the start of an improved outlook for Apple throughout the rest of the year.

The note forecasts that Apple's revenue will reach $117 billion, the same ballpark as the year-ago quarter, and slightly below its consensus estimate of $118 billion. For Earnings Per Share, Evercore puts the figure at $2.08, up year-on-year from $1.88, and just below the $2.10 consensus.

Evercore's note starts off by pointing out that Apple's stock has "underperformed slightly over the last few weeks," being up 1% year-to-date versus the 3% of the S&P500. It believes the disparity is driven by various investor worries.

"We think Apple should be able to report modest upside to [the December quarter] writes Evercore's analysts. China is "top of mind for investors," though emerging market share gains and developed market average selling price rises should help keep iPhone revenue stable for the period, and possibly into the March quarter.

Investor's other key risk worry is over Services, but Evercore thinks there should still be growth in the high-single-digit or low-double-digit range. This would be down to the uptick in Google payments in line with Google TAC growth, as well as sustained double-digit App Store growth, though investors will be closely watching the EU's Digital Markets Act for its effects on Apple's Services arm.

The ITC sales ban on the Apple Watch didn't do much damage to sales of the wearable as it was "only in effect for less than a weak and likely did not have a meaningful impact on sales."

Mac and iPad may see better trends following "a couple years of post-COVID hangover," though Evercore warns that December may still "remain muted."

On the Apple Vision Pro, Apple CEO Tim Cook and CFO Luca Maestri may provide more thoughts about the market and initial product volumes, which "could serve as an upside catalyst if Apple flags strong preorders."

For the March quarter, Evercore currently reckons Apple will bring in $98 billion in revenue, with an EPS of $1.65. The forecast for Q2 would represent a revenue increase of $3 billion year-over-year if it turns out to be correct.

Evercore currently rates Apple as "Outperform" with a price target of $200.