24/7 Wall St.

Apple Inc. (AAPL-NASDAQ) is the biggie on earnings tonight with analysts expecting $0.64 EPS and revenues of $5.17 Billion.  As far as comparing its guidance to next quarter, analysts expect the June quarter to come in at $0.67 EPS and $5.45 Billion.  The earnings whisper on this quarter is also in the $0.67 to $0.69 levels, but those numbers are very unofficial and many traders try to avoid that.

This is the last quarter that will not include any iPhone sales in the numbers, and the estimated initial sales waiting line is roughly 1 million units at the launch; this quarter will also include some of AppleTV sales and guidance as well.  We already know that Leopard has been delayed now, and the iPhone is expected to make up for any shortfalls on an ex-Leopard basis.

The company looks off the hook itself on the options backdating now that the focus has been on the ex-CFO and ex-Counsel.  Even after the ex-CFO has pointed the finger at Steve Jobs, most analysts do expect him to be personally cleared.

The current stock options prices are lofty (when stock was $94.50) with the MAY07 $95 CALLS at $3.30 and PUTS at $3.50, so a pure volatility trade with a straddle would run $6.80; open interest in the puts and calls is more biased toward the Call side as usual.

Apple’s minions in the bulge bracket firm research departments have roughly a $115.00 price target ahead, and American Technology Research has the highest price target of $145.00.  Analysts are still more positive than negative, and those that aren’t positive are mostly that way because of either valuations or price targets being met and exceeded.  The stock today is just under what acted as some resistance levels of $96 and $97+ back in January, but the overall actual price stability and average trading price has been stronger this time compared to back in January.  The chart has been in neutral territory over the last few days with no clear Buy/Sell reading or Overbought/Oversold readings.

As one final reminder, Apple has a history of under-promising and over-delivering on guidance; and on most occasions traders have greeted this based on the actual results rather than what they think is intentionally conservative guidance.  The company at its last quarter results in January guided this quarter estimates to $0.54 to $0.56 EPS and $4.8 to $4.9 Billion revenues; both were under consensus and under today’s estimates.  Apple’s 52-week trading range is $50.16 to $97.80 and its market cap is roughly $82 Billion. 

Jon C. Ogg
April 25, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.