Apple (AAPL) saw its shares surge during Wall Street’s flight to quality names after the recent coronavirus stock market correction. Analysts hope the consumer electronics giant’s financials will spring back quickly when the global economy recovers from the Covid-19 pandemic. With Apple stock on the upswing, many investors are wondering if AAPL stock is a buy right now.
- Apple is scheduled to release its fiscal third-quarter figures on Thursday, and analysts largely expect sales and profits to land above expectations.
- Yet several firms are more interested in whether Apple will issue an official forecast for its September quarter and upcoming iPhone release.
- Here’s what five analysts expect when the tech giant releases its quarterly results.
- Watch Apple trade live here.
The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.
But iPhone sales have slowed as users hold on to their handsets for longer periods between upgrades. However, the company could be on the brink of a major upgrade cycle with its first 5G iPhones, due out this fall.
Apple Q3 Earnings Preview: Stock’s 70% Rally Will Face A Reality Check
- Reports Q3 2020 results on Thursday, July 30, after the close
- Revenue expectation: $51.77B
- EPS expectation: $2.02
When Apple (NASDAQ: AAPL) reports its fiscal 2020, Q3 earnings later today, investors will be looking to justify the 70% rally in the company’s shares since the March dip. The speed and magnitude of this rebound suggest the iPhone maker will have a solid case to satisfy bulls.
Apple Stock News: 5G iPhone Delay?
Apple usually releases its latest iPhones in September, but market uncertainties related to the coronavirus pandemic could delay the launch.
On June 4, wireless chipmaker Broadcom (AVGO) signaled that Apple is pushing back the production ramp for its next-generation iPhones by about a month. The news supported earlier media reports that Apple is postponing the iPhone 12 series launch because of manufacturing interruptions in Asia and weakened global consumer demand due to the coronavirus pandemic.
However, recent reports from Apple’s supply chain indicate that the company is back on for a September launch. Analysts expect the iPhone 12 lineup to include both 4G and 5G handsets.
On April 15, Apple introduced a lower-cost smartphone aimed at budget-conscious consumers and emerging markets. The second-generation iPhone SE starts at $399.
Apple Opportunities For Growth
With iPhone growth slowing, investors are wondering what the next big growth driver will be for Apple stock.
Lately, two businesses have given Apple’s sales and profits a boost: services and wearables.
In the March quarter, Apple’s services revenue rose nearly 17% to $13.35 billion. Services include App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade, and other offerings.
On April 21, Apple launched a major international expansion of its services offerings. It brought the App Store, Apple Arcade, Apple Podcasts, and iCloud to 20 more countries and Apple Music to 52 additional countries.
Meanwhile, Apple’s Wearables, Home and Accessories unit saw sales jump 22.5% to $6.28 billion in the March quarter. This unit includes wearables like the Apple Watch, AirPods wireless earbuds, and Beats headphones. It also contains the Apple HomePod wireless speaker and other miscellaneous gadgets.
Will services growth accelerate?
Investors will also likely pay close attention to any news regarding Apple’s second-largest segment: services.
Most of this business likely benefited from consumers sheltering at home. App sales and subscriptions, for instance, likely jumped as people all around the world became more reliant on virtual activities in light of store closures and social distancing measures.
But one area of Apple’s services business likely took a big hit: advertising. Given the uncertain environment for retailers, marketing budgets likely contracted and potentially led to a year-over-year decline in ad spend across Apple’s platforms.
Nevertheless, investors should look for continued strong double-digit growth from services in fiscal Q3, as accelerated tailwinds in the company’s App Store purchases and subscriptions will likely offset the impact of headwinds in digital advertising.
Apple’s services revenue rose 17% year over year in fiscal Q2. Look for similar growth in fiscal Q3.
It’s quite possible that Apple may refrain from providing guidance once again since these are very uncertain times. However, if management does opt to provide guidance for the fourth quarter of fiscal 2020, the figure to beat is $62 billion; this is analysts’ average estimate for the period. This would translate to a 3.2% year-over-year decline in quarterly revenue for the period.
Apple reports its fiscal third-quarter results after the market closes on Thursday, July 30.
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