@Ssimsim：Apple Stock Offers a Good Hiding Place in a Rocky Stock Market. As earnings day gets closer, investors are having some early jitters. Since the start of the month, Apple stock is down 5% -- but not to worry, says Deutsche Bank analyst Sidney Ho. "While concerns about the China smartphone market and manufacturing shutdowns in China have increased recently," Apple stocks remains "a good hiding place in this volatile market." And next week's earnings are probably going to turn out just fine. Sure, on the one hand, the rapid spread of Omicron coronavirus in China has caused city-wide shutdowns and shuttered key factories, which could snarl supply chains and delay delivery of certain Apple products to market. iPhone supply chains in particular, however, which account for the majority of Apple's profits, should be in pretty good shape. And to the extent that demand for iPhones still outstrips supply, that will be good news for both sales and pricing power. Demand, after all, still looks good for Apple products. In a typical year, Ho notes that Apple's sales fall as much as 30% sequentially between fiscal Q1 and fiscal Q2, but he believes results will be at least a little "better" than that this year -- about a 28% sequential decline for iPhone revenues, and only a 24% decline for revenues overall. As the analyst explains, demand for high end smartphones in particular (and iPhones are considered very high end) "will hold up better than lower-priced options," leading to the better-than-historical result in fiscal Q2. Where Ho sees more reasons to worry is in fiscal Q3 (i.e. everyone else's calendar Q2). Covid-related shutdowns in China will affect supply chains more and more the longer shutdowns drag on. While again, Ho sees Apple working effectively to insulate its marquee franchise from supply shocks, he worries that "outside iPhone, supply chain will likely remain a problem," perhaps resulting in certain MacBook model deliveries being held up for as long as six to eight weeks. That being said, the more immediate Q2 numbers should look pretty good next week. Ho forecasts sales of about 60 million iPhones in fiscal Q2, leading to $51 billion in iPhone revenue -- up 7% year over year. Overall revenues should be $96 billion -- also up 7% -- with earnings per share ahead of Street estimates at $1.46. What's more, fiscal Q3 should be even stronger for Apple. Looking out an additional three months, Ho forecasts that Apple will sell 53 million iPhones next quarter, leading to iPhone revenue growth of 11% year over year. Overall sales growth should be 12% year over year -- $91 billion -- with earnings of $1.37 per share -- both of which numbers are ahead of Wall Street consensus. With growth trends intact, Ho wraps up with a reiteration of his "buy" call on Apple, and a $210 price target for Apple stock. This figure implies ~29% upside from current levels. Unsurprisingly, Apple stock tends to attract a lot of attention -- the stock has 29 recent analyst reviews on record, and they include 23 Buys against 6 Holds to give the company its Strong Buy consensus rating. The shares have an average price target of $193.11, indicating room for ~19% growth from the current price of $163.21. Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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