Has the iconic Apple fallen far from the tree? Once the forerunner of innovation, Apple Inc. has not made any innovation headway against its major competitors for some time now. Investors are desperately looking for that “spark” to reignite the remnants of the Jobs era.
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Fundamentals & Outlook
Apple’s icon status has carried the company which is reflected in its YTD performance of 30%, competing with other FAANG stocks but can it go on for much longer?
iPhone sales are slowing down, trade tensions flaring up will undoubtedly impact Apples profits moving forward as was the case in the fiscal second quarter. Apple’s sales in China which accounts for roughly 20% of total revenue, fell 22%. These are just some of the headwinds Tim Cook, CEO of Apple needs to address sooner rather than later.
With more possible downside to come the next earnings release scheduled for the 29th of July will be watched closely. It is widely expected by analysts that the upcoming earnings will miss expectations as the flagship iPhone sales disappoint. Earnings Per Share (EPS) is estimated at $2.10 which is lower by 10% over the same period a year ago at $2.34. Revenue for the quarter is expected to come in at $53.4 Billion.
Chart Life
We have seen a rebound from the parabolic move as described in the previous note and the share price has made some significant gains YTD. We might see more downside to come as the fundamentals start to break down and the price action starts to make lower highs and lower lows to target lower levels.
We would need to see the price action close above the $216 per share resistance level to indicate the buyers are in control and willing to pay more for the stock. Although this outlook would need to be reassessed after earnings as we might get a better entry point at lower levels.
Source - Bloomberg
Portfolio particulars:
- Portfolio Hold (Current)*
- Portfolio Buy opportunity: close above $222.00 per share**.
- WhatsTheBeef long term target price: $240.00 per share.
Take note: we might see some downside to the share price if the earnings disappoint which would change the outlook on current buying opportunities and long-term outlook.
Know your company: Apple Inc. (AAPL)
- Apple has a ‘no smoking’ ban regarding their computers. As ridiculous as it sounds, if you smoke while using an Apple computer, you void the warranty?
- Apple’s first company logo featured a drawing of the father of physics, Sir Isaac Newton.
- The name iPod was inspired by the movie 2001: A Space Odyssey.
*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.
**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behaviour would support the outlook and Close above refers to a share price close above a Technical Resistance level.
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Barry is a market analyst with GT247.com, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
