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Bernstein analysts reiterated a Market Perform rating on the Apple (NASDAQ:AAPL) stock as they believe the overall risk-reward is “neutral to modestly negative.”
The analysts believe consensus estimates appear to be “too high” for Apple as consensus isn’t pricing in seasonality due to Apple’s extra week in December. They see Apple’s year-over-year (YoY) revenue growth falling by 8% in the March quarter while consensus is calling for a 0.3% growth.
“We have not yet updated our FY 23 estimates to reflect Apple’s press release, and suspect they are more likely to go down than up. While it is possible that delays in production could smooth out seasonality in Q1 and Q2, we still believe that 2H FY 23 and FY 23 estimates are too high,” the analysts said in a client note.
The key question remains whether Apple pointed in its press release to delayed or lost shipments.
“We believe the latter scenario is more likely; right now 10 (out of Apple’s 40+) analysts have lowered FY 23 revenue and EPS by an average of 2%-3%.”
The analysts also told clients that Apple’s relative premium to peers is high compared to history.
“We note that while Apple has had few periods of material underperformance over the last 15 years, nearly all have occurred in the 3 to 6 months following the release of the iPhone, typically reflecting disappointing iPhone cycles,” the analysts added.
At 05:30 EST (10:30 GMT), Apple stock is down by 0.7% in pre-market trading.
