J.P. Morgan Analyst Samik Chatterjee lowered Apple earnings estimates (NASDAQ:) due to the lower revenue growth projections for iPhone SE (led by Services) and iPhone.

Analyst notes that J.P. Morgan is now in line with consensus earnings for FY2022. Chatterjee reduced the high-street iPhone volume forecast for CY22 from 250 million to 245 millions. This was mainly due to the decrease in iPhone SE3’s estimates, which dropped from 30 million down to 24 million.

We remain confident in our estimates of iPhone 13 as we anticipate the combination of new color variant launches and a high than usual inventory level in channel, Chatterjee stated in a client letter. This is against the background of existing supply chain constraints that will offset lower customer spending.

Chatterjee took these actions after Apple was removed from the Analyst Focus List. This is in response to a cautious outlook on consumer spending, influenced by lower growth projections for the smartphone industry.

Our FY23 and FY24 expectations are higher than ours. This is due to better-than expected growth in Products and a strong growth trajectory in margins and earnings. Chatterjee said that our long-term positive outlook on shares leads to us maintaining our Overweight rating.

An analyst points out a slowing momentum for services against hard comparables.

The gross app store revenue and new downloads have declined in comparison to C1Q22’s y/y trends. This is partly due to tough comparables but also marks the first sequential moderation of gross revenue in Q1Q22 since C4Q19. Slower engagement in App Store will reduce Services revenue growth within the +15-20% range in FY22. We therefore lower our estimates for sequential growth in Service revenues in fiscal year.

J.P. Morgan is still bullish on Apple, as it has the potential to sustain product revenue growth and share gains from its hardware products.