A Return to Growth
Apple faced several challenges during fiscal 2023, including tough comparisons, foreign-exchange headwinds, and an uneven macroeconomic environment. These factors impacted the company’s performance, with total revenue declining throughout the year. However, these declines improved over time.
In the fourth quarter of fiscal 2023, revenue was down by only 1% year over year, but when adjusted to exclude foreign-exchange headwinds, it actually increased. This is an encouraging sign that Apple’s top-line growth is on the right track.
Anticipating the first quarter of fiscal 2024, analysts forecast a 1% year-over-year increase in revenue. Although it may not appear significant at first glance, it’s important to note that this quarter has one fewer week compared to the same quarter last year. Apple management acknowledges that this timing difference will impact the quarter’s revenue by an estimated 7 percentage points. Therefore, even with these headwinds, analysts expect a return to growth for Apple, reflecting a positive trajectory to justify its valuation.
On average, analysts anticipate a modest 3.5% growth in revenue for fiscal 2024, accompanied by a 7.4% growth in earnings per share. Considering Apple’s current stock valuation, investors are hopeful that the company will surpass these forecasts.
Guidance will be Vital
Investors eagerly anticipate Apple’s fiscal first-quarter financial momentum in the upcoming earnings report. However, it is not only the reported results that investors will focus on; management’s guidance will be equally crucial. Investors hope to see a more optimistic outlook that positions Apple for even faster revenue growth in the second quarter of fiscal 2024.
The consensus analyst forecast currently predicts a 1.6% year-over-year growth in revenue for the second fiscal quarter. Investors will be watching out for management’s guidance, hoping for a target of around 2% year-over-year revenue growth or higher.
Looking Beyond Financial Guidance
Alongside financial guidance, investors also anticipate commentary from Apple’s management regarding demand for its new products. The market is eager to hear positive reports on iPhone demand and the performance of Apple Vision, the company’s latest product.
Moreover, investors are hoping for a rebound in Mac sales momentum after a lackluster year for personal computers overall in 2023. Apple’s Mac segment faced limited major product refreshes, but investors are optimistic about potential growth in this area.
The fiscal first-quarter results will be unveiled on Thursday, February 1, after the market closes. Investors are anticipating valuable insights from the report and subsequent guidance as they evaluate Apple’s future prospects.