$Apple(AAPL)$ 's June quarter sales outlook lacks specific product growth details due to tariff, demand, and legal uncertainties. While the immediate earnings impact is low and long-term tariff navigation is expected to improve, caution is key on near-term profit margins, anticipating further decline after June.
Despite this, Apple raised its dividend and buybacks, expressing confidence. The stock shows strong cash flow.
Tariffs: Minimal March Impact, $900M June Cost
March saw limited tariff impact thanks to supply chain management. However, June costs are projected to rise by $900M (net of one-time items) assuming current tariff policies remain. Most US-bound iPhones will be from India, and most iPads, Macs, Watches, and AirPods from Vietnam. The main tariff concern is the 20% rate on Chinese imports, with a total 145% on some China revenues.
Profit Margins Likely to Dip
June's profit margin forecast (46% midpoint) suggests a slight 0.26% year-over-year drop, the first since early 2023. Product profit margins have been declining for five quarters. Long-term margin improvement is expected via tariff offsets and service growth.
The revenues and cash from operations in 2024 neared the highs of 2022, the operating income continued growing, as the cash pile.
Lowered Expectations, Price Target to $226 considering annual level.
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