Apple (NASDAQ:AAPL), at its “Scary Fast” event on October 30, unveiled a new MacBook Pro line-up featuring the new M3 chips, including M3, M3 Pro, and M3 Max. The new MacBook Pro features a next-gen GPU (Graphics Processing Unit) architecture and a faster CPU (Central Processing Unit), which enhances its capabilities. The launch came ahead of its Q4 earnings results scheduled for Thursday, November 2.
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Along with MacBook Pro models, the company also launched a new 24” iMac.
Following the launch, Goldman Sachs analyst Mike Ng said that Apple’s “refreshed Mac portfolio” will strengthen its competitive positioning and enable the company to capitalize on the recovery in the PC industry.
Whether the new Mac portfolio will drive Apple’s top line remains a wait-and-watch story. Meanwhile, let’s look at analysts’ Q4 expectations.
Apple’s – Q4 Expectations
Wall Street expects Apple to post revenue of $89.30 billion in Q4, which reflects a slight decline from the prior-year quarter’s revenue of $90.15 billion. The expected year-over-year decline reflects weakness in hardware sales. It’s worth highlighting that iPhone revenue fell 2% in the June quarter. Further, Mac and iPad sales were down by 7% and 20%, respectively.
Barclays analyst Tim Long expects the softness in hardware sales to continue in Q4. The analyst lowered the price target on AAPL stock to $166 from $167 and kept a Hold recommendation on October 30. Nonetheless, Long believes that the strength in the Services segment will help offset the weakness in hardware revenues.
Echoing similar sentiments, KeyBanc analyst Brandon Nispel downgraded Apple stock to Hold on October 30. Nispel is more concerned regarding the company’s Q1 guidance and expects hardware sales to decline.
While Apple’s top line could face challenges, its bottom line is expected to show an improvement on a year-over-year basis. Analysts expect Apple to post earnings of $1.39 in Q4, which compares favorably to the EPS of $1.29 in the prior-year quarter.
Is Apple a Buy, Hold, or Sell?
Wall Street analysts are cautiously optimistic about Apple stock due to the short-term headwinds regarding hardware sales. With 22 Buys and Nine Holds, Apple stock sports a Moderate Buy consensus rating.
Further, the average AAPL stock price target of $204.24 implies 19.94% upside potential from current levels.
