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Home🔹Latest Reports🔹Apple Inc.🔹Q2 In Line/Weak Management Guidance for Q3
Apple Inc.

Q2 In Line/Weak Management Guidance for Q3

BySid Rajeev, B.Tech, CFA, MBANovember 29, 2023
Q2 In Line/Weak Management Guidance for Q3

Disclosure: Apple Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.

Company Details

Sector
Technology
Industry
Consumer Electronics

Trading Information

Live Price
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Ticker & Exchange
AAPL:NASDAQ
AAPL.NE:CN

Rating and Key Data

•••
MetricsValue
Stock Price (11/29/23)US $171.77
Fair ValueUS $183.86
Risk2
52 Week RangeUS $124-176
Shares O/S (M)16
Market Cap. (M)US $3
Current Yield (%)N/A
P/E (forward)0.5
P/B29

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Report Highlights

  • Q2-FY2023 (quarter ended March 2023) revenue and net income were down 3% YoY, but in line with our forecasts. Q1 revenue was down 6% YoY. 
  • Stronger revenue from services (5% YoY) and iPhone sales (2% YoY) was more than offset by weaker sales of Mac (-31% YoY) and iPad (-13% YoY). Management expects Q3 sales to contract 3% YoY as well.
  • On a positive note, iPhone sales (2% YoY) outperformed the global smartphone market, which contracted 13% YoY. iPhone’s share of the global smartphone market increased 3 ppt YoY, to 21%. As of February 2023, there were 2B Apple devices in circulation globally, up from 1.8B in January 2022.
  • We believe continued growth in revenue from services is highly promising, bringing more stability to AAPL’s revenue. At the end of Q2, there were 975M paid subscribers, up from 900M at the end of Q1.
  • We were pleased with AAPL’s recent initiatives, such as the opening of its first store in India, and the launching of new solutions, including Apple Pay Later (offering two-month loans for consumers) and Apple Card Savings (offering high-yield savings accounts). 
  • Due to increased odds of rate cuts in H2-2023, we are expecting a rally in tech stocks. Key headwinds include slower global GDP growth, and weak 2023 sales forecasts for PCs (-7% YoY), tablets (-3% YoY), and smartphones (-4% YoY) - Source: Gartner. The IMF is projecting global GDP growth to decline to 2.8% in 2023, from 3.4% in 2022.
Key Financial Data (YE Sept 30, $M) 2017 2018 2019 2020 2021E 2022E
Cash, cash equivalent and marketable securities 268,895 237,100 205,898 191,830 184,620 189,006
Working Capital 27,831 15,410 57,101 38,321 56,547 80,773
Total Assets 375,319 365,725 338,516 323,888 327,615 341,152
Revenue 229,234 265,595 260,174 274,515 351,984 385,856
Net Income 48,351 59,531 55,256 57,411 92,361 101,182
EPS Diluted ($) 2.32 3 2.99 3.28 5.5 6.03

 

Relative Valuation - AAPL  
EPS 2022E ($) $6.29
EPS 2023E ($) $6.74
Target P/E multiple for 2022E (x) - 20% premium to avg 29.1x
Target P/E Multiple for 2023E (x) - 20% premium to avg 25.9x
   
Fair value per share ($) - P/E Multiple (2022E) 182.81
Fair value per share ($) - P/E Multiple (2023E) 174.61

Rating and Key Data

•••
MetricsValue
Stock Price (11/29/23)US $171.77
Fair ValueUS $183.86
Risk2
52 Week RangeUS $124-176
Shares O/S (M)16
Market Cap. (M)US $3
Current Yield (%)N/A
P/E (forward)0.5
P/B29

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