As Apple prepares to announce its financial results for the second quarter of its fiscal year 2025 on Thursday, May 1, market analysts are closely monitoring the potential outcomes. Morgan Stanley investment bank notes that despite facing some headwinds, Apple is expected to deliver results slightly above analysts' expectations.
Morgan Stanley's Forecasts for Apple's Earnings and Revenues
Eric Woodring, an analyst at Morgan Stanley, indicated in a recent note to clients that the results for the quarter ending in March, which is Apple’s second quarter, may slightly surprise analysts.
Morgan Stanley expects Apple's revenues in the second quarter to reach $95.7 billion with earnings per share of $1.64. This slightly exceeds the overall market consensus, which predicts $94.2 billion in revenue and $1.61 for earnings per share, according to comparisons with projections from other analysts, including JP Morgan.
The following image illustrates Apple’s financial performance over past quarters:
Factors Supporting the Predictions:
The slight potential for this outperformance is attributed to several factors, as Morgan Stanley pointed to unexpectedly strong iPhone sales figures, favorable foreign exchange rates due to the weakening US dollar, continued robust growth in Apple's services sector, which is expected to reach 12% year-over-year.
Some analysts also believe that the uncertainty surrounding potential price increases related to tariffs may have prompted consumers and sales channels to make iPhone and Mac purchases in this quarter.
Morgan Stanley has also raised its iPhone shipment forecasts for the second quarter from 51 million to 54 million units and has revised its forecasts for Mac and iPad shipments upwards.
Warnings about Overall Profit Margins in the Next Quarter::
Despite the positive outlook for second-quarter results, Morgan Stanley warns of potential pressures on overall profit margins in the following quarter ending in June, primarily due to the ongoing tariff situation. However, the bank believes this downside risk has already been accounted for in investor forecasts.
Overweight Recommendation
Morgan Stanley reaffirmed its "overweight" rating and recently raised its price target from $220 to $235. The firm also expects Apple to announce a 4% increase in dividends and authorize an additional $110 billion for stock buybacks as part of its capital return program.
