Samik Chatterjee, a JPMorgan analyst has spoken out on Apple (NASDAQ) in preparation for the company’s FQ2 results which will be released later this week.

To reflect the challenges facing the consumer spending industry, the analyst has lowered the iPhone unit forecast. New forecasts predict that 235 million iPhone units will be sold in 2011, down from 245 million.

“The larger reduction in our forecast is being led by iPhone SE3 (now estimated to deliver less volume than SE2), and only modest cuts to iPhone 13 as we expect demand for the line-up to be more resilient,” Chatterjee said in a client note.

Analyst Chatterjee is positive about Mac sales, as he anticipates share gains for the fifth consecutive quarter. Chatterjee calls for sales of 6.5 millions units, compared to the consensus of 6.3. This will partially offset the iPhone’s weakness.

Apple also faces tough competition and slowing consumer spending.

“Growth trends for gross app store revenue, new downloads, and gaming revenue worsened in C1Q22, which while partly on account of tough comps, is also driven by the first sequential moderation in gross revenue since C4Q19. As a result, we continue to expect the moderating momentum on the App Store to limit Services growth in the +15%-20% y/y range in FY22.”

Apple’s stock may also be hit by less conservative guidance. This is due to the possibility of incorporating consumer spending slowdowns.

“We expect Apple to guide to moderating y/y revenue growth in F3Q22 incorporating the impact of both the slowdown in consumer spending as well as tough compares. Forecast total revenue growth is +2% y/y in F3Q22 vs. consensus of +6% y/y,” the analyst added.

Chatterjee calls on Apple to declare another increase in dividends, with high-single-digit percentage range, and a buyback authorization for $90 billion.

An analyst reduced the price target from $210.00 to $205.00 due to lower estimates.

The Overweight rating is maintained on the above-consensus projections for full-year revenue and earnings “led by our continued expectation for better than anticipated growth in Products as well as margin and earnings trajectory on the back of robust growth in Services.”

Apple shares are down by 1% on Monday pre-open.

By Senad Karaahmetovic