Thursday, December 9, 2021

Morgan Stanley analyst calls iPhone production issues ‘overblown’

Despite concerns around the current supply chain and the ongoing chip shortage, Apple is reportedly likely to beat out Wall Street’s financial expectations for the fourth quarter of 2021.

In a note to investors obtained by AppleInsider, Morgan Stanley analyst Katy Huberty said that the performance of the iPhone and the company’s services business will propel Apple past the outcomes that analysts are expecting to hear when the company hosts its fourth-quarter earnings call next week.

As with past quarters, the analyst doesn’t expect Apple to provide formal guidance. Although she’s upbeat about Apple’s December quarter despite supply chain issues, Huberty believes that it’s more likely for Apple to speak to segment-level growth trends instead.

On the other hand, potential changes to Apple’s App Store business model and questions of iPhone growth sustainability could make year-over-year compares difficult.

The analyst has raised her Apple fourth quarter revenue expectations to $88.2 billion, a 36% year-over-year increase that comes in ahead of consensus. The new estimate is higher than her previous forecast of $83.6 billion. Wall Street is expecting Apple to report revenue of $84.8 billion. Huberty says her new estimate is based on higher iPhone, iPad, and Mac shipments.

Huberty even believes that, despite recent availability issues with the iPhone lineup, production problems with Apple’s most profitable product are “overblown.”

The analyst also notes that iPhone pricing is likely to be more of a tailwind for Apple than she had anticipated. She believes that iPhone average selling price could hit $883 in 2022, significantly higher than consensus of $824.

Huberty also raises her 2022 revenue estimate to $397.1 billion and EPS to $5.90.

Apple has a lot to work with for the upcoming holiday season. Just this week, the company announced the new 14-inch and 16-inch MacBook Pro, 3rd generation AirPods, new colors for the HomePod mini, and its Apple Music Voice plan.

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