In a recent conference call, Apple CEO Tim Cook and CFO Luca Maestri shared the financial results for Q4 2023. The overall consensus among analysts is that the quarter performed decently, although there is some caution about a potentially shorter Q1 2024.
During the quarter, Apple generated $89.5 billion in revenue, a slight decrease from the $90.1 billion in the same period last year. iPhone revenue saw a slight increase to $43.8 billion, while iPad dropped from $7.17 billion to $6.43 billion, and Mac decreased from $11.5 billion to $7.61 billion. Services continued to grow, reaching $22.31 billion, and Wearables, Home, and Accessories slightly decreased to $9.32 billion.
Looking ahead, Apple expects Mac sales to continue growing in Q1, while wearables may experience slower growth. Analysts quickly responded to these figures and offered their insights on the company’s financial status.
Deepwater Asset Management’s Gene Munster and Brian Baker believe that Apple’s outlook for the December quarter is better than it initially appears. They suggest that if the quarter were one week longer, Apple would see a 7% YoY revenue growth instead of the projected 1%. They also note that the growth of the active device install base will drive a new chapter for investors viewing Apple as a necessary consumer staples company for the next five years.
In terms of revenue decline in China, Deepwater states that it aligns with the variability seen over the past year. They forecast that China’s manufacturing contribution to Apple’s overall revenue will decrease to 25-30% in five years, with India taking on a bigger role.
Piper Sandler’s note characterizes Apple’s December quarter results guide as “soft” compared to Street Expectations. They highlight that Mac and iPad had strong performances last year, making it challenging for Apple to deliver growth this year. However, they view iPhone as doing well, with positive tailwinds from services, albeit with supply constraints for the Pro models.
J.P. Morgan believes that Apple’s resilient performance in Q4 proves the strength of its product portfolio across hardware and services. They note that the effects of the challenging macro environment were evident and may raise concerns about the sustainability of growth if the macro effects persist. J.P. Morgan rates Apple as “Overweight” with a target price of $225.
Wedbush considers Apple’s December 2024 guide to be soft relative to street expectations, with mixed results overall. They anticipate revenues to be similar to those of the December 2022 quarter, with an expected negative impact of 100 basis points due to foreign exchange issues. Wedbush rates Apple as “Overweight” with a price target of $220.
TD Cowen describes the results as in line with consensus, with record sell-in to emerging markets like India. They note that lower iPhone unit sales are being offset by demand in emerging markets and higher average selling prices. TD Cowen rates Apple as “Outperform” with a price target of $220.
Rosenblatt describes the Q4 results as muted, with slow progress and sales seeming to be stuck in a muted place without disruptive new products. While Apple’s position as the maker of the world’s most important device, the iPhone, is admirable, Rosenblatt believes that the company needs to introduce innovative products to drive growth. Rosenblatt rates Apple as “Neutral” with a price target of $189.
