Barclays analysts said they expect Apple (NASDAQ:AAPL) to report financial results for the March quarter that are consistent with forecasts. However, they predict that expectations for the June quarter will be below estimates due to reduced demand for hardware. Based on their analysis, this trend is likely to span multiple quarters for Apple.
More specifically, analysts predict that Apple’s financial performance in the March quarter will be close to estimates, but there will be a slight decline in iPhone sales revenues. This is expected to be partially offset by a small increase in revenue from iPad and Mac sales.
They also predict that revenue from Apple’s Services will maintain a steady growth rate of approximately 11%.
“According to our calculations, 50.5 million iPhones were sold in the March quarter, with the average estimate of market analysts being approximately 1 million units higher,” Barclays analysts said.
“More importantly, the hardware revenue estimate for the June quarter may be lower than market analysts’ expectations due to weakening demand. We believe that market analysts’ current consensus estimates are overly optimistic. While our information points to 42 million iPhone sales and 39 million iPhone production for the June quarter, the market Analyst consensus points to 44 million iPhone sales.”
Latest market analysis shows that iPhone 15 sales in China have continued to decline at double-digit rates year over year in recent weeks. This decline follows a 20% decline in sales in the first quarter.
There was a shift in sales towards more basic iPhone models, leading to a negative impact on product mix and profit margins. As a result, this is expected to result in a year-on-year decline in the average selling price (ASP) of iPhones, as observed by Barclays.
Although Apple management continues to focus on promoting the Vision Pro, Barclays sees this product as having a negligible impact on Apple’s current and next year financial results.
“We do not expect the iPhone 16 to include significant design changes. Major new applications of Generative AI technology in iPhones are unlikely to be introduced before 2025 at the earliest. The analysis team estimates that initial production plans for the iPhone 16 will be in the low 80 million unit range, which “It shows there will be little or no growth in unit sales year over year,” he said.
Analysts affirmed their Underweight rating for Apple’s shares.