Apple Inc. (AAPL) is poised to report its fiscal second-quarter (Q2) earnings on May 2 after the market closes, with analysts on Wall Street projecting earnings per share (EPS) of $1.51 and revenue of $90.83 billion. In the lead-up to the earnings announcement, analysts are highlighting the company’s promising outlook and four key growth drivers.
BofA Securities analyst Wamsi Mohan has reiterated a Buy rating for Apple stock, assigning a price target of $225, which translates to a potential upside of 36.4%. Mohan’s bullish stance is anchored in four primary catalysts, making Apple a “top pick for 2024”.
These catalysts encompass:
1. Announcement of capital return at earnings in May
2. Unveiling of generative AI (Gen AI) advancements at the Worldwide Developers’ Conference (WWDC) in June
3. The highly anticipated launch of the iPhone 16 in the fall
4. A steady increase in gross profit dollar growth each quarter
Mohan anticipates a robust iPhone upgrade cycle in fiscal year 2025 (FY 2025), driven by demand for cutting-edge hardware that supports Gen AI capabilities. Furthermore, he foresees sustained growth in Apple’s Services revenue segment and improved margins driven by the utilization of in-house silicon.
Additionally, the analyst suggests that the incorporation of AI features could attract increased institutional ownership of Apple stock, while indicating that any legal hurdles that arise are likely to be manageable.
With regard to the Q2 earnings report, Mohan anticipates a solid overall performance but cautions that any downward revisions in guidance for F2Q could lead to a pullback in shares.
However, he predicts robust growth and margins in Services revenue, along with the possibility of some Vision Pro sales in the forthcoming quarters. Moreover, Mohan anticipates a new buyback authorization announcement during the F2Q earnings call, reflecting Apple’s commitment to shareholder returns.
In summary, Apple’s Q2 earnings report is highly anticipated, with analysts highlighting the company’s strong fundamentals and growth potential. The four key catalysts identified by BofA Securities analyst Wamsi Mohan provide a comprehensive framework for evaluating Apple’s prospects and underscore its position as a leading innovator in the tech industry.
