When:
Tuesday 28th January after US close
Expectations:
Revenue $85.5 billion - $89.5 billion exp.
EPS $4.53 exp.
A lot to live up to
After rallying over 100% across the previous year, 33% in the past three months alone and joining the exclusive $1 trillion dollar club, the pressure is on Apple to prove that it is worth recent lofty valuations. After returning to top and bottom line growth the market will want to see that the momentum can continue.
Favourable earnings expected
Revenue guidance is between $85.5 billion and $89.5 billion with the midpoint implying 4% growth. Apple’s guidance is typically conservative. Services and wearables are expected to see another period of strong growth whilst iPhone sales saw an upswing in demand in the final part of Q4 boding well for Q1.
Key points to watch for on earnings call:
-
5G – management comments on plan to capitalise on 5G network
-
Emerging services – comments on financial services, how Apple card is performing, and healthcare could be increasingly important drivers in 2020.
-
Non – smart phone products – after strong Christmas sales of Apple watches and Air Pods Pro
Risks Ahead - Upgrade cycle 2020
Recent optimism surrounding Apple is owing to the upgrade cycle that the broader smart phone market is heading into. For the past few years customers have had little reason to upgrade or replace their phones, hanging onto their devices for longer.
With the build out of the 5G network, customers will have a reason to upgrade their phones. 5G and China are expected to be big drivers of growth at Apple. US, UK and Korea will also play their part.
It is this upgrade cycle, the wearables business and Apple’s focus on services, which are the main reasons behind analysts lifting Apple’s price target, helping to lift the share price.
There is of course no guarantee that the 5G upgrade cycle will appear. There is always the possibility that investors won’t be wowed by Apple’s 5G iPhone or simply aren’t interested in upgrading to 5G. iPhone shipments actually declined during the move from 3G to 5G.
As demand expectations have helped lift Apple shares to $319.99, should that demand fail to materialise across the coming year, Apple’s share price take a hit.
Chart thoughts
Apple trades firmly above its 50, 100 and 200 sma on a strongly bullish 4 hour chart. On the RSI, it has dipped back below 70 so is no longer in over bought territory. Immediate resistance is at $319.99 the recent all-time high. Immediate support is at the psychological level of $300.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.