Apple Q1 Earnings Expected to be Impacted by Weak Chinese Economy
By Kyle Rodda | 11:25 (UTC), 30 January 2024
Overview
Apple Inc. (AAPL) is set to report its Q1 results after the market closes on February 1, 2024. Analysts are anticipating a growth in earnings despite challenges posed by a sluggish Chinese economy.
Expected Earnings Growth
According to Bloomberg data, analysts predict that Apple’s earnings will grow approximately 12% in fiscal Q1, reaching $2.11 per share. This growth is expected despite flat revenue growth, attributed to improved operating margins.
Impact of Weak Chinese Demand
Weak consumer demand in China is anticipated to negatively affect Apple’s revenues, particularly in its products division. Regional revenue in China is forecasted to decline by 1.7%, compounded by increased competition from domestic brands. While services revenue is expected to bolster Apple’s performance, a decrease in fees compared to the previous year may hinder growth in this segment.
Investor Sentiment
Investors are keenly awaiting insights regarding future consumer demand, not only in China but also in the U.S. and other developed markets. Concerns regarding supply disruptions, chip security, and the outlook for the Apple Watch—amid an ongoing patent dispute over its oximeter feature—are also on the radar.
Analyst Ratings
Despite the challenges, the broker community remains optimistic about Apple’s stock. The consensus rating is a “buy,” with 34 analysts recommending this, 15 suggesting a “hold,” and 6 advising a sell. The consensus price target stands at $199.82, which is below current market valuations.
Technical Analysis
From a technical standpoint, Apple shares are currently in a structural uptrend, although the momentum appears to be slowing. A significant resistance level is identified at $200 per share, which aligns with the stock’s all-time high. A breakout above this level following the quarterly results could signal bullish momentum. Conversely, technical support is noted around $180, with a drop below this threshold indicating a potential for a deeper sell-off.