Apple's services to highlight December quarter results, says Morgan Stanley
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Apple (NASDAQ:AAPL) is likely to beat Wall Street estimates for the December quarter, with services being a particular area of strength according to Morgan Stanley analyst Katy Huberty.
However, Huberty said such gains have already been "relatively priced in by the market."

On Thursday, Huberty, who has an overweight rating and a $200-a-share price target on Apple's (AAPL) stock, said she expects Apple's (AAPL) services revenue for the quarter to total $19.2 billion, which is 3% ahead of Wall Street's estimates, and would represent a 21% increase from a year ago. Huberty said better-than-expected App Store performance is adding to Apple's (AAPL) services strength.
Huberty said that Apple's (AAPL) revenue stability, upcoming product launches and expanding into new markets, such as the oft-rumored AR/VR headset "makes [Apple] more defensive in a rising rate environment."
Apple (AAPL) shares were fractionally higher in Thursday's pre-market trading at $167.02.
Huberty notes that Apple (AAPL) shares are up 19% since falling to a quarterly low point of $138.27 on Oct. 4. By comparison, the S&P 500 (SP500) is up by 5% over the same period.
Concerning the quarter, Huberty said she expects Apple (AAPL) to report revenue that is 3% ahead of what Wall Street is expecting, citing stronger iPhone production and fewer manufacturing hiccups, thanks in part to strong growth from China in the quarter. Analysts expect Apple (AAPL) to earn $1.88 a share on $118.2 billion in revenue, when it reports results on Jan. 27.
"When we take these data points together, we believe iPhone likely outperformed consensus estimates," said Huberty, who believes Apple shipped 83 million iPhones during the December quarter. Huberty said such figures would represent a 4% increase in shipments during the same period in 2020, and are "largely in-line" with forecasts from BofA's greater China technology hardware team's forecasts.
Earlier this week, Bank of America analyst Wamsi Mohan noted that Apple (AAPL) likely had strong growth in the App Store in its fiscal 2022 first-quarter, citing data from Sensor Tower.