Apple (AAPL) is set to report fiscal fourth-quarter earnings after market close on Thursday. These results, however, are set to be eclipsed by the tech giant’s outlook for the current quarter and next year, following the company’s highly anticipated 5G-enabled smartphone unveiling earlier this month.
Here are the main results expected from Apple’s report, based on consensus estimates compiled by Bloomberg:
Revenue from Apple’s service offerings like Apple News, Apple TV+ and iCloud have comprised a growing portion of the company’s overall sales and are expected to have increased again in the fourth quarter. Consensus analysts are looking for service revenue to rise to $13.87 billion, from $13.16 billion in the third and $12.5 billion in the fourth quarter of last year.
Mac computer and wearables revenue also likely grew over last quarter and 2019, given the increase in demand for these products during the pandemic. The company also launched new versions of the iPad and Apple Watch in September before the close of the fourth quarter.
Revenue from the iPhone, however, likely came in lower during the fourth quarter this year than in the same period in 2019, with customers having waited for the next generation of iPhone devices to get released. Apple unveiled the iPhone 12 and iPhone 12 Pro — the first suite of 5G-enabled handsets from the company so far — at an event earlier in October, or about one month later than it typically releases its new phones each year due to disruptions from the pandemic.
“For investors the September quarter takes a back seat to the main event which is around gauging the demand growth trajectory for iPhone 12 into the holiday quarter and the rest of 2021,” WedBush Securities analyst Dan Ives, who rates Apple’s stock as Outperform, wrote in a note. “We expect some directional commentary from Cook around pre-order demand from iPhone 12 which based on our analysis thus far is tracking more than 2x its predecessor iPhone 11, a bullish sign coming out of the gates.”
Ives added that he believes about 350 million of the estimated 950 million iPhone installed worldwide are currently in the “window of an upgrade opportunity,” leading to what may be an “unprecedented” round of iPhone-buying this year for the tech company.
Promotional activity has also been more aggressive around the iPhone 12 than in previous cycles, likely as a bid to boost sales during the pandemic. Carriers including AT&T, T-Mobile and Verizon (the parent company of Yahoo Finance) have each offered a number of trade-in credits to incentivize customers to make the switch to the new handset.
In terms of Apple’s stock, Wall Street may stay on the sidelines to gauge the success of the iPhone 12 launch until early next year, when more data becomes available on its debut. That could serve as a near-term drag on stock appreciation, according to at least one analyst.
“Coupled with an elevated valuation, we believe the shares are likely to remain range-bound until investors gain clarity on the initial success of the iPhone 12 launch,” UBS analyst David Vogt, who rates Apple shares as Neutral, said in a note Tuesday. “Although incremental data points are expected through the end of 2020, we believe investors typically reserve judgment on the success until the company reports December results in late January/early February 2021.”
Shares of Apple have risen 53% year-to-date, outperforming the S&P 500’s just 1.8% gain.
This post will be updated with Apple’s fiscal fourth-quarter results after market close on Thursday.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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