Written by Brenda Nakalema

Apple reports earnings today. This is what can be expected.

Apple will release its earning’s report for the December quarter after the close of trading on Thursday. Amidst the anticipation, …

Apple will release its earning’s report for the December quarter after the close of trading on Thursday. Amidst the anticipation, investors anxiously hope for a stellar performance which would be a much-needed source of excitement.

Wall Street analysts estimate Apple (ticker: AAPL) to report $119 billion in sales, which would be a 7% gain from the previous year. Analysts anticipate profits of $1.90 a share, up from $1.68.

Apple shares closed down 0.1%, at $159.69 on Wednesday. The S&P 500 was down 0.2%. At the start of the Covid-19 pandemic, Apple ceased providing detailed guidance and has yet to reverse the decision. However, Luca Maestri, the Chief Financial Officer, said one quarter ago that the company expects very solid year-over-year growth in the December quarter. He also warned that iPad sales could take a beating because of the prevalent supply chain constraints. Maestri ended his statement by warning that chip shortages experienced in the December quarter would have a bigger financial impact on the results than they did in the previous quarter.

Nonetheless, the iPhone still reigns high over others in the industry and will take centre stage as investors and analysts alike look to see how the device faired this time. Wall Street expects iPhone sales of $67.6 billion, a gain of roughly 3%- representing about 57% of projected revenue. Services revenue is projected to grow 18.5% to $18.7 billion. The Macs are expected to bring in revenue of about $9.9 billion, a gain of 13.9%, while for the wearables, Home and Accessories segment, the consensus forecast stands at $14.4 billion, a 10.7% gain. According to Wall Street analysts, expected iPad sales could stand at $8.2 billion, a 2.4% decline.

Consensus estimates for the March quarter expect sales of $ 90.2 billion, with profits of $1.32 a share- this takes into account the expected decline in iPhone sales to $46.6 billion.

Evercore ISI analyst Amit Daryanani wrote that the company is likely to meet or exceed the street estimates for the December quarter. Still, he has concerns that the current march quarter expectations are too aggressive. He makes the note that historically, march- quarter sales have slipped by about 32% sequentially from the December quarter.

Despite this, Amit holds fast to his Outperform rating and $210 price target on Apple shares, noting that the company “remains well-positioned to deliver both secular earnings growth and significant capital returns over a multi-year period.”

Katy Huberty, a Morgan Stanley analyst, wrote that she believes December- quarter results will be slightly ahead of current estimates, driven by strong iPhone sales. Her forecast stands at $72.1 billion, a leap above the street estimate. In previewing the quarter, Katy maintains her Overweight rating and $200 target on Apple shares, saying that “revenue stability, upcoming product launches and expansion into new markets” makes Apple a defensive pick in a rising interest-rate environment.