Apple FY22Q3 preview: raise estimates as iPhone and Mac upside tempered by FX

(1) Based on strength in iPhones in what is typically a seasonally slow quarter hampered by supply chain issue headwinds along with better Mac sales relative to the prior forecast, UBS is raising its FY3Q22 revenue and EPS estimates to $82.0B and $1.15 from $80.2B and $1.11, roughly in line with the street.

(2) UBS's checks indicate iPhone and Mac revenue upside could be as much as $4 billion combined in constant currency (iPhone $2.5 billion /Mac ~$1.5 billion) relative to the $44.4 billion estimate. However, incremental strength in the US dollar over the past three months could offset roughly half of the upside.

(1) Supported by channel checks and China smartphone data, UBS expects iPhone units to exceed the 42M estimate by 2 million units. In addition, UBS estimates units skewed towards the higher end of the portfolio in the quarter, notably the Pro and Pro Max models.

(2) Like for-like ASPs on both a QoQ and YoY basis should be tailwinds despite the disruptions and macro headwinds.UBS's checks indicate over 70% of iPhones in the June quarter were iPhone 13s (base, Pro and Max), up from the high 60s% in the March quarter and just high 50s% of iPhone 12 models in the June 2021 quarter.

(3) UBS raises the June iPhone revenue estimate to $38.7B from $37.1B (consensus $38.6B).Although FX will be a revenue headwind, UBS believes the focus will squarely be on the strength of iPhone unit demand and ASPs given the material Covid and supply chain disruptions in the quarter.

As checks have indicated, Macs continue to take share in the PC market shipping roughly 6.4 million units in the June quarter, roughly 1.2 million, or 22% above UBS's 5.2 million estimates.

Despite the PC market declining roughly 13% YoY(including Chromebooks) in the quarter, UBS estimates Mac units increased ~9.3% resulting in an 8.8% market share, up 170 bps year-over-year trailing only Lenovo, HP Inc, and Dell combined for roughly 62% share in the quarter, down from ~64% last year.

Bloomberg's consensus estimates for Apple's FY3Q22 results are revenue of $82.718billion,1.6% YoY; adjusted net income of $19.02billion,23% YoY; and adjusted earnings per share of $1.156,-10.9% YoY.