Apple will publish its earnings report for Q3, 2022 on July 28. Ahead of the publication, JP Morgan analyst Samik Chatterjee predicts that the tech giant is likely to see only “limited near-term or medium-term risks” of the current economic condition.
In Q1, 2022, Apple reported a new all-time high earnings record of $123.9 billion in revenue with 11% Y-o-Y growth, and in Q2, 2022 the company reported $97.3 billion record revenue with 9% Y-o-Y growth.
In spite of economic conditions, “Apple is a safe haven stock for investors” believes JP Morgan analyst
In his new note to investors, Chatterjee answered questions regarding Apple’s third June quarter earnings and the possible risks the company might face because of the macroeconomic deterioration.
He wrote that “Apple is a safe haven stock for investors” because of the resilience of the earnings estimates. The analyst “modestly” increased Apple estimates for Q3 and Q4 for 2022 driven by the company’s promising hardware lineup. The high demand for iPhone 13, especially in the recovering Chinese economy will have a positive impact on the company’s earnings. Chatterjee wrote:
“The modest changes to our forecasts is primarily led by an increase to iPhone revenues. Recent acceleration of momentum in China in particular for iPhone demand [leads] us to raise our full-year FY22 volume forecast from 247 [million] to 252 [million] units, despite the headwinds from the Russia exit.”
Moving forward, he expects that any downside in the company’s current valuation is likely to be “fairly limited.” For the upcoming Q4 of 2022 and Q1 of 2023, Chatterjee also expects that the tech giant will only face limited risks.
However, this is a possibility of medium-term risks to the iPhone 14 cycle because of economic issues like foreign exchange rates making iPhone 14’s more expensive in the international markets. Having said that, the tech company might be able to absorb the medium-term risks because of weak competition in the 5G devices market.
Chatterjee jas kept his 12-month AAPL price target of $200.