Apple investors and analysts have a lot of questions ahead of the company’s scheduled quarterly earnings report on May 2.
The March quarter is typically one of the slower quarters for Apple, especially compared to the company’s blowout holiday quarters.
RBC analyst Amit Daryanani believes Apple will report “stable to modestly better than expected” iPhone unit sales this quarter in a note distributed to clients on Monday. Ultimately, RBC analysts remain positive on Apple.
Still, there are some questions that investors will be looking at answers for, Daryanani writes. Key focus items include:
“1) iPhone: Investors will focus on units, ASP, and sales mix during the quarter.
2) Gross margins: Puts and takes from mix shift toward the flagship iPhone 7 device, 7+ mix, services growth, and NAND pricing.
3) Capital allocation program: Increase in the company’s share buyback program and dividend.
4) Services mix: Contribution of services to total revenues and any data points on revenue/profitability of Apple Music, AppStore, and ApplePay.
5) iPhone 8: Any comments regarding iPhone 8 timing or features.
6) OPEX dynamics: How opex will trend vs. revenue trajectory; opex has been trending as a higher percentage of revenue in recent years.”
To translate from analyst writing, investors will primarily want to look at iPhone sales, whether Apple is selling more pricey “Plus” models this year, and whether Apple plans to increase dividends or share buybacks.
Other longer-term concerns include the growth of Apple’s “Services” business, which includes revenue from the App Store, and whether Apple’s operating expenditures will continue to grow faster than sales.
But the question that Apple is unlikely to give any insight about is its upcoming redesigned iPhone. Many analysts believe that the iPhone that launches this fall could spur a huge number of upgrades from older phones — what RBC calls “iPhone 8 cycle tailwinds” and other analysts have been calling the “super cycle.”
RBC changed its price target for Apple stock from $155 to $157 and rates it “outperform.”