Goldman forecasts fiscal second-quarter EPS of $2.00

Second call for EPS $2.00

Goldman Sachs is pushing back on negative sentiment surrounding Apple ahead of its second-quarter earnings, arguing that the stock's recent underperformance reflects fears that do not match the company's underlying position.

But analyst Michael Ng said, "concerns for Apple are overly pessimistic given its much stronger relative position."

Goldman Sachs forecasts fiscal second-quarter EPS of $2.00, above the Street consensus of $1.93, with outperformance expected across iPhone revenue, Mac revenue and gross margins.

Favorable foreign exchange and strong Services revenue growth are also expected to flatter results.

On Services, Goldman Sachs projects 14% year-on-year growth despite another slow App Store quarter, with iCloud+, AppleCare+, prior price increases on Apple TV+ and solid advertising performance cited as supporting drivers.

Looking ahead, the bank sees advertising inventory expansion in the App Store and Maps as further tailwinds.

Recent data points cited by Goldman Sachs include high-end smartphone outperformance flagged by TSMC on its latest earnings call, iPhone share gains in China, and reports that Apple is actively securing mobile DRAM supply while keeping pricing competitive.

The bank sees further catalysts ahead, including WWDC, where new AI Siri features are expected, and the fall iPhone lineup, which Goldman Sachs described as likely "the most innovative ever with the introduction of the iPhone Fold."

Source: Yahoo Finance

NB: My target of $1.98 seems amiss.…

There was little to argue in this. Management telegraphed more or less the same forecast and the note simply iterates more recent data points from supply chain. WWDC is the perennial "catalyst" though it never turns out that way. A catalyst is a compound or substance that accelerates a chemical reaction. The search for an accelerant is unnecessary as the reaction happens with or without it. Somehow we believe that without a catalyst nothing happens.

What is always happening, the reaction that is always ongoing, is the creation of 100 million new customers every year. Accelerating this process is not a matter of just new products or change in sentiment with AI. Much of this rate is due to overall global economic and demographic change.