Apple’s Q221 earnings will crush Wall Street expectations

In a note to clients, Morgan Stanley analyst Katy Huberty writes that Apple’s Q221 earnings could crush Street expectations. Huberty has an Overweight rating and a $158 target price on the stock, up 17% from Monday’s $134.72 closing price.

Eric J. Savitz for Barron’s:

The buzz around Apple last year was off the charts, even for what is the buzziest of technology companies. Anticipation of the fall launch of the company’s first 5G phones, surging demand for both Macs and iPads as the pandemic rolled on, and strength in both wearables and services fed off each other. The pieces all came together in the December quarter, when Apple (ticker: AAPL) posted its biggest quarter ever. Sales soared 21% to $111.4 billion, more than $8 billion over the Street consensus.

That’s a tough act to follow, particularly with the March quarter, which always slows from the holiday-boosted December quarter. But Apple could pull off the quintuple double again when its results come out after the bell Wednesday. The Street certainly thinks so, even if the market, which has pushed Apple shares up less than 2% in 2021, has been more cautious. Consensus estimates call for double-digit increases from last year across the board: iPhones sales up 43%, to $41.4 billion; iPad sales up 29%, to $5.6 billion; Mac sales of $6.8 billion, up 27%; wearables sales (mostly Apple Watch and AirPods) of $7.4 billion, up 18%; and a 16% bump in services, to $15.5 billion.

Overall, the Street consensus expects sales of $77 billion, up 32% from a year ago, with profits of 98 cents a share. [Morgan Stanley’s Huberty] sees the top line above $80 billion, with all segments growing at least 19% year over year. She is especially bullish on Mac and iPad sales, with estimates far above consensus—53% for Macs and 52% for iPads. She also expects Apple to increase its dividend by 10% and expand its stock repurchase program by $60 billion.

MacDailyNews Take: In Cupertino, the Law of Large Numbers needs to be revoked.

On April 18, 2012, 9 years and 10 days from today’s Apple earnings report, when we wrote the following regarding the so-called “Law of Large Numbers, AAPL closed at $18.71 (split-adjusted):

What is Apple’s share of the smartphone market? What’s Mac’s share of the PC market? How many hundreds of millions are primed to buy their first tablet, a market that Apple created and dominates with iPad?

Apple’s current size is meaningless because their addressable market is virtually limitless. — MacDailyNews, April 18, 2012