Apple earnings are on deck, and Wall Street isn’t feeling so cheery

How is the iPhone 15 doing in a choppy economic environment? Investors are about to find out.

Apple Inc.’s
AAPL,
+1.87%
September-quarter results, due out Thursday afternoon, should offer an early glimpse of the iPhone 15’s performance, as the period included just over a week’s worth of sales of the consumer-electronics giant’s new lineup. Management’s commentary on the earnings call will tell even more of the story.

Analysts aren’t so upbeat heading into the report.

“Despite slight outperformance over the last month, we still lean tactically
cautious into earnings on Thursday,” Morgan Stanley Erik Woodring wrote in a note to clients earlier this week ahead of the fiscal fourth-quarter report.

Woodring is worried about “uneven consumer spending” and supply constraints, two factors that could lead Apple to imply a holiday-quarter revenue range below the consensus view and below what’s seen normally around this time of year.

See also: Apple faces ‘ominous’ setup heading into earnings, analyst warns

The company also faces concerns around its China business, with Piper Sandler analyst Harsh Kumar flagging tough comparisons in the region as well as heightened local competition and sluggish macroeconomic conditions.

“Overall, while India will provide some recourse versus declining China sales, we don’t think it will be enough to offset global and China weakness,” Kumar wrote, while lowering his overall December-quarter revenue estimate to $120.9 billion, below the $123.1 billion FactSet consensus.

As it stands, analysts expect Apple to hit an unceremonious milestone in the September quarter, as consensus projections call for a fourth consecutive quarter of revenue declines, to $89.3 billion. That would mark the first time since 2001 that Apple saw year-over-year sales fall for four quarters in a row.

Even Kumar’s below-consensus estimate for the December quarter implies the company would snap its streak come the holidays, however, as Apple recorded $117.2 billion on the top line a year before.

Evercore ISI’s Amit Daryanani sees the September-quarter consensus revenue target as feasible for Apple, though he contends “the bar is a little higher” when looking to the December quarter, as estimates imply 5.5% growth.

“Nonetheless, we think this should be achievable given weak [comparisons], strong services, and some modest iPhone ASP uplift,” he wrote, referring to average selling prices. Apple eliminated the cheapest storage configuration for its iPhone 15 Pro Max device, effectively raising the starting price for that model in a likely benefit to pricing trends.

Read: Is Apple’s iPhone 15 pricing strategy a risky bet or right for this economy?

While iPhones rule the show, analysts will also be watching for iPad and Mac dynamics, which won’t necessarily be pretty.

“Mac and iPad will likely continue to see large declines, but this looks adequately accounted for in numbers with consensus at down 15%-25%,” Daryanani wrote.

Those polled by FactSet are looking for $6.2 billion in iPad revenue for the September quarter, down from $7.2 billion a year before, along with $8.5 billion in Mac revenue, below the $11.5 billion sum the company posted a year earlier.

Apple shares have declined 11% over the past three months, as the Dow Jones Industrial Average
DJIA,
which counts Apple as a component, has shed about 7%.

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