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Apple Profits: Optimism for iPhone Does Not Change Apple's Downward Path



In terms of Apple Inc. stock, you might think that Wall Street is expecting something big from the company's earnings report.

Apple shares

AAPL, + 1.23%

continue to roar higher, hampered by inertia calls for new company phones and service offerings, and indications that the smartphone giant may be on better trajectory in China. Shares hit another record on Friday, the fifth for the last six trading sessions, and he is the best representative in the Dow Jones Industrial Average

DJIA, + 0.57%

for 2019

However, the consensus estimates do not support all the alleged enthusiasm for Apple's fourth-quarter fiscal report scheduled for Wednesday afternoon. FactSet analysts see the company report revenue of $ 63 billion, nearly flat from $ 62.9 billion a year ago. The report will limit the fiscal year in which we expect Apple's profits and revenues to decline from a year earlier, which occurred at Apple only once since 2001.

The fourth quarter fiscal figures will contain little more than a weekly sales value on the iPhone 11, so the big test for Apple is in its prospect, which should show how the company expects its devices to perform during the holidays. Analysts have called for sales growth in December for the quarter last year, but overall estimates have not occurred since late July.

However, Katie Huberti of Morgan Stanley, the most bullish stock analyst, says Apple doesn't even have to do much with its earnings report to keep up the stock price trajectory.

Opinion: The Apple iPhone event reveals a dramatic change in strategy

"We believe that Apple remains undisclosed by investors despite its 15% profit from recent profits and therefore if Apple is able to it publishes the September-quarter results and December-quarter guidance, then stocks can maintain momentum at the end of the year, preventing any major turmoil in global markets, "she wrote. "In the end, investors seem to own the stock for the upcoming iPhone 5G cycle and are offering new services, so even with the December and quarter light-source scenario, we are expecting an influx of name in the early 2020s, as many Apple typically grows nine to 12 years months before major product cycles. "

What to Expect

Revenue: Analyzes by FactSet expect Apple to earn $ 2.83 a share for its fiscal fourth quarter, down from $ 2.91 in the previous quarter. According to Estimize, which aggregates forecasts from hedge funds, scientists and more, the average forecast requires $ 2.89.

Revenue: The FactSet consensus modeled $ 62.98 billion in September-quarter revenue, while the consensus estimate is $ 63.06 billion. A year earlier, Apple reported $ 62.9 billion in revenue.

FactSet consensus requires $ 32.77 billion in iPhone revenue, $ 4.67 billion in iPad revenue, $ 7.5 billion in Mac revenue, $ 5.94 billion in wearable, home and accessories revenue, and $ 12.22 billion dollars in service revenue.

Stock movement: Apple shares have gained after seven of the last 10 earnings reports of the company, except for a negative prior announcement made before Apple's last holiday quarter. The stock has grown 56% so far this year, while the Dow has risen 16%.

What else to watch

One topic of interest in Apple's report is how the company plans to report its new Apple TV + streaming service. The company is offering an annual free trial of the service to those who make new hardware purchases, which Huberty says will require Apple to defer about $ 57 for iPhones sold for depreciation as revenue for Apple TV + services during the year the sample is active. It also expects Apple to amortize content costs as a service cost of goods sold over three years, but management may provide some guidance on accounting treatment during the conference.

Huberty estimates overweight stocks at $ 289, the highest on Wall Street.

Apple TV + is a big topic for DA Davidson analyst Tom Forte, the service will launch on November 1st. It will look for the company's prospects for the service now that pricing is announced and Apple is releasing its free trial offer for those who buy new iPhones, iPads, Macs, iPods or Apple TVs.

Forte has a buy rating and a $ 270 target for Apple shares. Opinion: Apple's design should be good without Johnny Ive

Adherence to China is another major issue for Apple, and UBS analyst Timothy Arkuri sees the company making progress in the region, which is so far a sore spot. this year. "Monthly iPhone trends in China are encouraging," he writes, as the company reports sales growth there in two of the last three months, according to third-party data.

It estimates the purchase of Apple shares at a target price of $ 275.

Monnes, Cresspi, Hard and Co. analyst Brian White tells investors to keep in mind the changes in time between this current cycle and the last one. All three of Apple's new iPhones were available on September 20 this year, while Apple released the iPhone XR from last season in October. He estimates the purchase of the stock for $ 265.


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