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- Apple is set to report FQ2 earnings on Wednesday as investors wait to see if the company can continue its streak of earnings beats.
- Analysts are predicting revenues of $77.35 billion and EPS of $0.99 per share.
- Here is what four Wall Street analysts expect from Apple's FQ2 earnings report.
- Watch Apple trade live here.
Apple will report its fiscal second-quarter earnings after the market closes on Wednesday, and all eyes will be on iPhone sales and guidance as the Street debates whether we are seeing an iPhone "supercycle."
The average analyst estimate for Apple's upcoming earnings report includes revenue of $77.35 billion and earnings per share of $0.99, according to data from Yahoo Finance.
Over the last two years, Apple has beaten EPS, and revenue estimates 100% of the time.
Overall, Wall Street remains bullish on Apple's prospects. The company boasts 26 "buy" or "strong-buy" ratings, nine "hold" ratings, and just two "sell" ratings from analysts.
Insider gathered four Wall Street analysts' predictions for the tech giant's fiscal second-quarter earnings report.
Goldman Sachs: A strong report is "likely," but composition is what matters
Goldman Sachs analysts, led by Rod Hall, CFA, said that Mac and iPad sales will be a standout in the upcoming quarter. However, in Hall's view, the really important growth figures are iPhone sales and guidance.
"Current high levels of both iPad and Mac demand are unlikely to be sustainable as the world re-opens, so another beat driven more by these areas may not be enough to drive the shares further," Rod Hall, CFA, said.
"We continue to believe the trajectory of iPhone demand is the main determinant of whether Apple can make what we see as overly optimistic consensus forecasts for the end of 2021 and this may be the first quarter in which data points from Apple begin to confirm what supply chain adjustments already suggest," Hall added.
The Goldman team criticized other Wall Street analysts for their belief in a "supercycle" of iPhone sales. The team said based on recent checks, they expect demand to fall off for iPhones after 2021.
Goldman Sachs holds a "sell" rating and a $83 price target on shares of Apple.
Wedbush: "Sunny days in Cupertino"
Wedbush's Dan Ives expects an iPhone "supercycle" to be at the forefront of Apple's earnings report on Wednesday.
The analyst said he believes Apple will beat both top and bottom-line estimates and has the potential to sell north of 240 million iPhone units in 2021.
"We have not seen a robust launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis," Ives said.
"While the Street is forecasting roughly 220 million iPhone units for FY21, we believe based on this current trajectory and in a bull case Cupertino still has potential to sell north of 240 million units (~250 million could be in the cards - an eye-popping figure) which would easily eclipse the previous Apple record of 231 million units sold in FY15," Ives added
Ives also said that the Street is worried about moderation in growth due to the chip shortage, but said he "strongly disagrees" with that assessment and that this is the most "robust" iPhone cycle he has seen in years.
Wedbush holds an "outperform" rating and a $175 price target on shares of Apple.
JP Morgan: Expecting "a revenue beat" with dividends and repurchases in focus
JP Morgan analysts said that the Street's expectations for a revenue beat have been increasing amid rising demand for Macs and iPads.
The analysts forecasted upside in both Mac and iPad sales in Apple's FQ2 report and predicted 18% year-over-year growth in services revenue.
The team also believes Apple's guidance will be limited in the quarter, and will mostly indicate FQ3 is typically a slower quarter for the firm. A dividend increase and share repurchases are also in focus at JP Morgan.
"We expect another $50 billion authorization similar to last year and a high single-digit percentage increase in dividends," the JP Morgan team added.
JP Morgan holds an "overweight" rating and a $150 price target on shares of Apple.
Bank of America: "iPhone sales, capital return in focus"
Bank of America analysts, led by Wamsi Mohan, said they expect a "strong" quarter from apple with revenues in the $83 billion to $85 billion range and EPS at $1.10.
Mohan and his team believe Apple is set to outperform due to a benefit from the work-at-home trend.
"The company continues to benefit from increased spending on electronics given the remote work/home environment and from government stimulus cheques to consumers," the analysts wrote.
Mohan is modeling a 30% jump in App store revenue and expects gross margins to benefit from a better mix and FX rates.
BofA analysts also expect a $50 billion buyback program to be announced along with a 5% dividend increase.
The bank holds a "neutral" rating and a $155 price target on shares of Apple.
