Stock of the day 25/04/2016 – Apple Inc

If you believe reports all is not well at the omnipresent Apple; how will the tech giant fare when it reveals its second quarter figures on Tuesday?

Having suffered a sharp drop at the end of 2015 Apple began the New Year at $103.03, and things only got worse from that point onwards. The general panic-stricken trading that started 2016 saw the company spend most of January under the $100 mark, a trend that was exacerbated by Apple’s own first quarter figures at the end of the month.

Falling short of Q1 revenue estimates to post $75.9 billion against the $76.67 billion forecast, but besting expectations with $18.4 billion in earnings compared to the $18.22 billion anticipated, the main focus of Apple’s first quarter report was not on these headline figures but rather what was going on with its all-important iPhone division. Worryingly sales of the smartphone were effectively flat across 2015, whilst over the holiday-period Apple sold a disappointing 74.78 million iPhones against the 76.5 million-plus that had been expected by analysts.


(Source: IT-Finance.com 25/04/2016)

That update helped push Apple to a 2016 low of $92.09 by the beginning of February, though the stock saw a fairly robust recovery from that point onwards, rising alongside the rest of the Dow to hit a year (and 4 month) high of $122.38 by the middle of April. However, with its Q2 2016 figures looming on the horizon the stock has begun to fall once again, slipping to a current trading price of $105.68 (IT-Finance.com, 25/04/2016) on reports that it has significantly reduced its iPhone production.

That reduction is likely to be reflected in its second quarter report, with analysts forecasting revenue to fall 10.4% to $52 billion alongside a 14% drop in earnings per share to $2. That is off of an expected 50 million iPhones sold, an eye-watering fall from the 61 million flogged at this point last year. Then there are the rumours that the iPhone 7 will likely arrive without many ‘attractive selling points’, alongside the reports that Samsung shipped twice as many smartphones as Apple during the first quarter of 2016. Of course this constant barrage of bad news means it might not take much for Apple to surpass investors’ expectations when it finally reveals what state it is in on Tuesday.

Apple Inc has a consensus rating of ‘Buy’ with an average target price of $137.46.