Apple Earnings Preview: Can AAPL turn equities around?

Apple stock set for headline grabbing earnings release after the close on Thursday.
AAPL has fallen like many stocks, but good earnings could turn the entire market.
Apple shares could get a boost from rumoured strong iPhone deliveries.

Ivan Brian FXStreet

Apple (AAPL) takes centre stage after the close today as it releases its earnings. Now that Fed chair Powell has done his hawkish dance, it is time for earnings season to get back on track and hopefully provide some form of catalyst. So far we have had benign bank sector earnings. Tech and oil now step into the limelight to provide some badly needed support. Oil is booming, and so far Microsoft (MSFT) is also booming thanks to its cloud division.

Tesla (TSLA) was a bit mixed, but given that it is a high growth name, it was never likely to provide the sort of catalyst this market needs. Apple though has all the qualities investors look for: massive cash generation, massive cash pile, and the potential to turn market sentiment around.

Apple Stock News

Ahead of earnings, we note with interest the latest data from China showing that Apple has taken back the top spot in China phone sales after six years. A report out from Counterpoint Research shows Apple's market share in China hit a record high of 23% in the last quarter of 2021. Hopefully, this augurs well for the earnings themselves. Strong earnings though will need to be backed up with a strong outlook. Many were left puzzled by the reaction of TSLA in the afterhours market on Wednesday. The uncertain outlook was the main driver with supply chain issues cited. We maintain our line: "the market hates uncertainty."

Apple is expected to post earnings per share (EPS) of $1.88 on revenues of $118.28 billion. EPS has not been missed for five years, but revenue did miss forecasts the last time out. This was due to supply chain issues and chip shortages, so this aspect of the earnings commentary will perhaps be more important.

Apple Stock Forecast

Apple has retraced to key support at $157. We set this as our short-term pivot. This is the last major high before the double top in December and January. Breaking lower opens up a road to the 200-day moving average at $148. Here there is a strong amount of volume support that adds to its strength. Holding $157 then opens the door for a move to $167.

Apple (AAPL) chart, daily

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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