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Apple Q1 Preview: What’s Next for AAPL Stock?

Apple has struggled to meet demand for its latest iPhone due to supply chain challenges and growth is expected to trail the rest of the big tech companies this year. How will AAPL shares perform on the stock market in these circumstances?

When will Apple release its first quarter results?

Apple is expected to release results covering the first quarter of its fiscal year on Thursday, January 27.

Summary of Apple’s first quarter results

Apple missed expectations for the first time in more than two years when it released its latest round of quarterly results last October. This was after the company shipped fewer iPhones than expected due to supply constraints and the Covid-19 disruption of manufacturing in Asia, underscoring that even the largest companies are grappling with supply chain challenges. of supply that are affecting the technology industry.

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Having cost Apple around $6 billion last quarter, the supply woes could worsen in the first of its new fiscal year, and that could be significant given the final three months of the calendar year that play host to the busy buying season. The holidays generally mark Apple’s best quarter for sales. .

Still, Wall Street expects revenue to hit a new quarterly record of $119.33 billion, up more than 7% from $111.44 billion a year earlier. Analysts expect EPS to rise more than 13% to $1.91 in the first quarter from $1.68 a year earlier.

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Hardware sales, which range from iPhones and iPads to Mac computers and their range of home and portable devices, are expected to grow a modest 3.7% to $99.21 billion. That’s especially weak given that the numbers will be helped by the previous year’s numbers caused by the iPhone 12 launch delay.

The biggest fear is that the supply crunch will last long enough for customers to delay upgrading, skipping the iPhone 13 released last September and waiting for the next model to be introduced. With that in mind, iPhone sales, which account for 52% of Apple’s revenue, in the first half of the fiscal year will be key in deciding whether Apple can pull off another record year of iPhone sales. Analysts currently believe Apple may sell 240 million iPhones this year, though some have forecast lower estimates, with Bloomberg suggesting tough conditions will push it closer to 225 million units.

It also increases pressure on Apple to accelerate its move to services, which enjoys higher margins and doesn’t suffer from the supply problems that plague the product division. The services division currently accounts for less than a fifth of Apple’s revenue, but it is growing at a much faster rate, with revenue expected to rise 18.5% to $18.68 billion in the first quarter, and shows a gross margin of almost 70% compared to the 35% it sells devices. The superior profitability of its services division should allow Apple to absorb the increase in costs generated by the products division.

Apple released a lengthy press release earlier this month that revealed that more than 745 million people paid for Apple subscriptions. This figure is believed to have increased from 660 million in mid-2021. Meanwhile, it revealed that its App Store serves more than 600 million people every week.

The services unit offers multiple avenues for growth for Apple, with the scope of opportunity demonstrated by the areas highlighted by the company in the announcement, including Apple Arcade, Apple Music, Apple TV, Apple Fitness, Apple News, Apple Podcasts, Apple Books, Apple Card, Apple Maps, iCloud and own digital wallet.

Physical device sales are expected to continue to grow this year, just at a significantly slower pace compared to what investors have grown accustomed to, and analysts believe it will continue to trend not just this year but next. Therefore, Apple needs to explore as many opportunities as possible to tap into its user base. But it’s important to remember that Apple’s services ecosystem is primarily driven by people with Apple devices, so hardware sales remain a key driver of Apple’s ability to grow its services division long-term.

Coming back to this week, sales of iPhones and other Apple devices will be key in deciding the market’s reaction. A heartbeat would give confidence that supply problems are starting to ease, while any disappointment raises fears that the year could be a disappointment for iPhone sales. You have an opportunity to counter this by accelerating the growth of higher margin services.

Wall Street thinks all the big tech companies will experience a significant slowdown in growth this year after record sales and profits in 2021, but Apple is likely to hold back the most. Analysts currently expect Apple to post 4.4% revenue growth and just 2% EPS growth in the current fiscal year. That would be a marked slowdown from the 33% growth in revenue and the 71% rise in profit in the last fiscal year. Meanwhile, the rest of Big Tech (Amazon, Alphabet, Meta, and Microsoft) should continue to deliver double-digit revenue increases and outperforming earnings growth in 2022. If Wall Street forecasts materialize, we could also see Apple , which became the first company to briefly surpass a $3 trillion valuation in early 2022, dethroned as the world’s most valuable publicly traded company.

What’s Next in the Stock Market for AAPL Stock?

Apple (AAPL) stock has lost more than 10% in market value since the beginning of 2022, largely in line with the broader declines seen in Big Tech stock over the new year.

If the current trend persists, as suggested by the bearish RSI and rising volumes, Apple shares could retest the 100-day SMA at $156. A break below opens the door to $147, a key support level in October and November and in line with the 200-day moving average SMA.

The hammer candlestick that emerged yesterday suggests that more sellers entered the market to fuel the stock market sell-off before being offset by an influx of buyers that helped drive stocks higher. This could indicate that a potential reversal is about to occur which could send shares higher, although this is due to be confirmed today. If APPL shares can start to find higher ground again in the stock market, then the shares initially target the 50-day moving average at $168 before they can start targeting the all-time high of $183 earlier this month. 2022.

AAPL shares have been trending down in the stock market since early 2022

(Source: Eikon)

the 43 courtiers Covering Apple has a buy rating on the stock and believes the year-to-date sell-off has been overdone, with an average price target of $180.84, implying there is more than 14% upside potential from the current price of stocks and a new record in the charts

According to Joshua Warner, Forex.com » Official site

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Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation to buy or sell foreign exchange contracts or CFDs. . Although the information contained in this document comes from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect, or consequential damages that may result from anyone relying on such information.

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