Continuation of part one:
In turn, at the beginning of January 2024, Barclays analysts lowered their recommendations for Apple to "underweight" with a target price of $160. Analysts expect weaker iPhone sales (both in terms of volume and sales mix), and no rebound in Mac, iPad and Wearables.
Weaker sales in China in particular will weigh on results. In the case of Mac and iPad, sales may fall to pre-pandemic levels: "These two products combined were basically showing no growth pre-Covid, but are still running 20-30% above those levels despite the rest of the industry correcting." See Figure 5 and 6.
Additionally, Barclays analysts expect some deceleration in Services, with regulatory risk ramping. “We model ~10% and ~8%growth in Services in FY24 and FY25, well below prior growth estimate of ~20%. In 2024, we should get an initial determination on the Google TAC, and some app store investigations could intensify.” See Figure 7.
So what can have a positive impact on Apple in 2024? Apple Vision Pro will certainly be sold, not only to retail but also commercial customers.
Luca Maestri, CFO Apple during the results conference:
“Leading organizations across many industries such as Walmart, Nike, Vanguard, Stryker, Bloomberg, and SAP have started leveraging and investing in Apple Vision Pro as their new platform to bring innovative spatial computing experiences to their customers and employees. From everyday productivity to collaborative product design to immersive training, we cannot wait to see the amazing things our enterprise customers will create in the months and years to come.”
In the field of artificial intelligence, Apple - unlike other companies - does not provide greater details, but announced that in 2024 it will show what steps the company has taken in this regard. Market expectations in this area are very high.
Tim Cook, CEO of Apple during the earnings conference:
“As we look ahead, we will continue to invest in these and other technologies that will shape the future. That includes artificial intelligence where we continue to spend a tremendous amount of time and effort, and we're excited to share the details of our ongoing work in that space later this year.”
Tim Cook on the high price of Apple Vision Pro:
“(…) from a price point of view, there's an incredible amount of technology that's packed into the product. There's 5,000 patents in the product and it's, of course, built on many innovations that Apple has spent multiple years on, from silicon to displays and significant AI and machine learning. All the hand tracking, the room mapping, all of this stuff is driven by AI. And so, we're incredibly excited about it. I can't wait to be in the store for tomorrow and see the reaction myself.”
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