Apple (AAPL) earnings to serve as a clearing event - Morgan Stanley

Ahead of Apple's (NASDAQ: AAPL) earnings release at the beginning of February, Morgan Stanley analyst Erik Woodring said they expect the release "to serve as a clearing event."

This will allow investors to refocus on the FY25 'Edge AI' opportunity and margin/Services resilience, according to the analyst who maintained an Overweight rating and $220 price target on the iPhone maker's shares.

The bank expects AAPL to beat the December quarter consensus revenue and EPS estimates, driven by iPhone and Services. They now forecast $119 billion of revenue and $2.13 of EPS (1-2% ahead of Street expectations).

"However, we expect March quarter revenue guidance closer to MSe of $93B vs. Consensus at $96B (more in-line with buyside at $91-94B), and EPS of $1.54," wrote Woodring.

"Recent outperformance (2% off all-time highs) reflects excitement around Apple's [opportunity] in 'Edge AI', as well as expectations for gross margin/Services resilience," he added.

The bank believes the key metrics to watch out for in the release are total revenue, Services growth, gross margin, China revenue, and Apple's updated device/iPhone installed base disclosures.

By Sam Boughedda

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