Well, Apple’s earnings call is tonight and so far investors aren’t showing much confidence, with the price down this morning by 2.5%. Microsoft took their hit yesterday after it’s disappointing earning results last night and is down nearly 10% today.
Most analysts agree that strong iPhone 6 sales are required to get good results.
Apple stock could fall, warns BGC
In a report dated Jan. 26, BGC analyst Colin Gillis updated his projections for Apple’s December quarter, which is expected to set a new record thanks to the iPhone 6 and iPhone 6 Plus. Even though Apple is expected to report such strong results, however, he cautions that the company’s shares have declined with the last couple of earnings beats.
In the December 2013 quarter, Apple also reported record results, and its shares fell 8%. The year before that, the company also saw a new record, and shares fell by more than 12%. Gillis points out that currently, shares of Apple are within 6% of their $119 per share high (adjusted), which they hit on Nov. 26, 2014.
iPhone sales to drive Apple’s strong results
Gillis believes the smartphone market is essentially turning into the phone market as more and more consumers switch from feature phones to smartphones. He has pointed out in the past that Apple (NASDAQ:AAPL) is still very dependent on the iPhone, with potentially as much as 65% of its revenue coming from the iPhone in the December quarter.
He estimates that Apple (NASDAQ:AAPL) sold 66.5 million iPhone units during the quarter with an average selling price of $685. He thinks in order to push shares materially higher, Apple (NASDAQ:AAPL) must have sold at least 70 million iPhones during the quarter. The BGC analyst has a Hold rating and $103 per share price target on Apple.
In their report also dated Jan. 26, JPMorgan Chase & Co. (NYSE:JPM) analysts Rod Hall, Ashwin Kesireddy and Rajopal Raghunathan agreed with Gillis and most of the rest of Wall Street in saying the iPhone will drive Apple’s results. They believe the company shipped 64.8 million iPhone units but say there could be some upside to that estimate because supply may have caught up with demand toward the end of the quarter. For the current quarter, they estimate shipments of 52.9 million iPhones.
Do you agree with the analysts? What will Apple stock price look like tomorrow?
Are investors still counting on that iWatch? iPad? iPay? Has Apple been lying about the success of the iPhone 6?
Tomorrow we find out. What are your guesses?