Apple falls as soft holiday quarter outlook outweighs earnings beat; brokerages lower numbers

Investing.com - Apple Inc. (NASDAQ:AAPL) reported fiscal fourth quarter results that topped Wall Street estimates as better-than-expected services revenue boosted results.

While Apple was down modestly in after-hours trading on Thursday, losses accelerated after Apple's CFO Luca Maestri issued a soft sales outlook for the holiday quarter on the earnings call.

Apple stock was down 3.3% at 05:45 EDT (09:45 GMT).

The company reported earnings per share of $1.46 on revenue of $89.5 billion. Analysts polled by Investing.com forecast EPS of $1.39 on revenue of $89.31B.

The beat on top and bottom lines comes as sales growth in Americas and Europe helped ease the hit to revenue from a 2.5% fall in China sales following a rise in competition from rivals including Huawei.

iPhone revenue rose 3% to $43.81B from a year earlier, in line with Wall Street estimates of $43.81B.

The services business including Apple Pay, Apple TV+ and iCloud storage saw revenue rise 16% to $22.31B to an all-time high from a year earlier, beating analyst estimates of $21.35B.

Gross margin, led by the services business, was up 6.1% in Q4 from a year earlier.

Apple’s wearables, home, and accessories category - previously called other products - fell 3.4% to $9.32B from the year-ago period, above estimates of $9.7 billion.

Revenue for the iPad fell 10% and revenue for the Mac plunged 34% in the quarter from a year earlier.

Speaking on the call, CFO Maestri said Apple expects FQ1 revenue to be similar to last year's. Apple generated $117.2 billion in December revenue last year, while Street was looking for $122.8 billion.

"We expect iPhone revenue to grow year-over-year on an absolute basis. We also expect to grow after normalizing for both last year's supply disruptions and the one extra week," the CFO said.

Several brokerages lowered their price targets on Apple stock in response to the softer-than-expected FQ1 guidance.

"The December quarter typically sets the tone for the year: Running out normal seasonality from Q1 points to company revenues of $370-380B, below consensus (~$407B)," analysts at Bernstein said in a client note.

Analysts at Citi cut the price target by $10 to $230 per share, reflecting lowered product sales expectations.

Additional reporting by Senad Karaahmetovic