Following its fourth consecutive quarter of declining sales, Apple (AAPL) has predicted flat sales for the upcoming holiday season. The announcement resulted in a decline in Apple’s stock on Friday.
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Although Apple surpassed expectations for its fiscal fourth quarter ending on September 30, the company’s lackluster guidance for the December quarter disappointed. Apple reported earnings of $1.46 per share, a 13% year-over-year increase, on sales of $89.5 billion. This represented a 1% decrease compared to the previous year. Analysts had predicted earnings of $1.39 per share on sales of $89.3 billion.
Excluding foreign-exchange rate changes, Apple’s sales would have shown a slight increase in the September quarter. Chief Financial Officer Luca Maestri stated during a conference call with analysts that foreign exchange had a negative impact of over 2 percentage points in the period.
For the current quarter, Apple anticipates total company revenue to be “similar to last year.” Maestri explained that while the December quarter this year will have a duration of 13 weeks, the December quarter of the prior year spanned 14 weeks. Wall Street had previously expected 5% sales growth in the first fiscal quarter.
Despite the supply constraints on the premium iPhone 15 Pro and Pro Max models, Apple expects iPhone sales to experience year-over-year growth in the holiday quarter.
Apple Stock Experiences Decline
On the stock market today, Apple’s stock decreased by 0.5%, closing at 176.65.
Following the report, at least nine Wall Street firms reduced their price targets for Apple’s stock.
JPMorgan analyst Samik Chatterjee maintained an overweight rating on Apple’s stock but lowered the price target from 230 to 225.
In a client note, Chatterjee expressed concerns about potential growth issues if macroeconomic effects persist, despite a resilient performance by Apple. He stated that “the effects of the challenging macro were evident and were more profound on certain segments than imagined.”
Barclays analyst Tim Long reiterated his neutral rating on Apple’s stock and adjusted the price target to 161 from 166. Long commented in a note to clients that there continue to be indications of weak demand across hardware categories.
CEO Promotes Apple Vision Pro
During the analyst call, Chief Executive Tim Cook discussed the company’s upcoming mixed-reality headset, Apple Vision Pro, describing it as a “magical product.”
Cook highlighted the work of software developers who are creating applications for the device, which is scheduled to be launched in early 2024. According to Cook, these developers are producing “some truly incredible apps” that combine virtual reality with augmented reality.
Cook expressed excitement over the apps being created for Vision Pro, mentioning that they include “some real blow-away kinds of things.”
Apple’s stock has an IBD Composite Rating of 84 out of 99, according to IBD Stock Checkup. IBD’s Composite Rating consolidates five proprietary ratings into one comprehensive rating. The best growth stocks typically have a Composite Rating of 90 or higher.
For more stories on consumer technology, software, and semiconductor stocks, follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz.
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