Apple Inc. (NASDAQ: AAPL) stock has rallied more than 10% over a short time in the past. The most recent examples are October and November 2014 and February 2015. Apple shares have fallen 11% since April. Good earnings could get that figure back to zero, or even better.
Apple does not have to hit the numbers is did a year ago. The most recent quarter, which will be announced on July 26, are expected to be worse.
A large market research firm wrote:
Apple Inc. is expected to report earnings on 07/26/2016 after market close. The report will be for the fiscal Quarter ending Jun 2016. According to Zacks Investment Research, based on 14 analysts’ forecasts, the consensus EPS forecast for the quarter is $1.39. The reported EPS for the same quarter last year was $1.85.
The consensus among Wall Street analysts is that Apple sold 40 million iPhones last quarter. Anything well above that would trigger a share rally. The same would hold true if sales in Greater China moved higher quickly. Apple management has said the region is the most critical to its growth. The market, however, is dominated by smartphone companies that sell products well below the Apple price point.
Another tipping point for perceptions about Apple is its smartwatch. The Apple Watch is the only entirely new product Apple has produced in years. Recently, data from research company IDC showed sales of the product dropped 55% from the same quarter a year ago and led the category with a 47% market share. However, the entire industry has fallen apart. Overall smartwatch sales dropped 32% in the second quarter, compared to the same period a year ago. Apple cannot count on its smartwatch sales as the catalyst for a rally.
Apple’s future stock price relies heavily on the date of the iPhone 7 launch and whether there is huge demand for the product. The launch is likely to be in the fall, so it will have no effect on the quarter just ended.
These figures from the earnings announcement mean only one thing can drive a rally of 10% or better. Sales of the iPhone 6 family have to be impressively above expectations.
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