Apple 'more likely to guide down than guide up' says Bernstein

Investing.com -- Apple will report its fiscal Q4 2024 earnings on October 31, and Bernstein analysts are managing expectations cautiously.

While the Q4 data points have been "relatively healthy" and the weaker dollar provides a currency tailwind, Bernstein warns that the company's outlook may not inspire bullish sentiment.

"We believe that Apple (NASDAQ:AAPL ) will most likely guide in line (~60% probability), but is more likely to guide down (~35%) than guide up (<10%)," Bernstein wrote in a note previewing the earnings.

The analysts cited factors like flat iPhone revenues and a delayed rollout of Apple Intelligence as reasons for caution.

Consensus currently forecasts iPhone revenues to grow 65% sequentially in Q1 (Apple's December quarter), but Bernstein notes that this is still below the historical average.

They added, "Channel fill will likely be in line to above historical levels in Q4," meaning much of the demand may already be baked into the pipeline, leaving limited room for upside surprises.

While Bernstein has modestly raised its Q4 estimates and is now slightly above consensus, the firm lowered its FY 2025 forecasts due to soft data points for the iPhone 16.

"We forecast iPhone revenues to grow 5.6%, with units ~246 million (+5.5%)," added Bernstein.

The analysts also believe the iPhone 16 cycle could be "more backloaded," with upgrades possibly shifting to next year.

Although Bernstein sees potential upside from the iPhone 17 cycle and longer-term AI-driven upgrades, they warn that Apple stock tends to tread water in the months following a new iPhone launch.

"Following a strong run, we see current risk-reward on AAPL as in balance," they concluded, maintaining an "Outperform" rating with a $240 price target on the stock.

Source: Investing.com