Benzinga
Apple is expected to join the $ 100 billion revenue club
Did anyone say $ 100 billion? And then some? Wall Street analysts have. A consensus sees that Apple Inc (NASDAQ: AAPL) is joining the rare corporate crowd that surpassed the $ 100 billion quarterly revenue when it opened the books on Wednesday in its fiscal quarter. This is, of course, a record for AAPL and may have been helped by holiday sales of its new iPhone 12. But it’s one in a series of fresh peaks that AAPL has achieved in a year – one that the company has acknowledged in many quarters. was shaken by adversity. . CFO Luca Maestri said the strong results in the previous quarter’s report were driven by ‘the unmatched loyalty of our customers’. This may or may not be true, but when AAPL reports earnings, investors will also listen to how well AAPL is playing the market share game. According to Morningstar analysts, it looks like it was a game changer for AAPL, according to Morningstar analysts who believe it drives sales of iPads, desktops and laptops. Anything that could be overshadowed by the iPhone 12 holiday sales in the first quarter of the first quarter is probably safe to say that it will get a fair share of attention after the closing clock on Wednesday afternoon. AAPL has always been an attention-grabber when the earnings season rolls around, and now, with a market capitalization of $ 2.34 billion and reaching new highs in the share price, it looks like it will definitely take a place under the spotlight, even as against a number of other high-profile technical equities results this week. Tesla Inc. (NASDAQ: TSLA) and Facebook, Inc. (NASDAQ: FB) reported the same afternoon. Numbers Wall Street analysts expect AAPL revenue to rise 12% year-on-year to about $ 103 billion, according to FactSet. Some companies, such as Loup Ventures, are looking for much stronger figures: up 19% to $ 109.5 billion. From an earnings perspective, the street reached a consensus of $ 1.41 per share. Morgan Stanley (NYSE: MS) also predicts the highest side of consensus, with revenue of $ 108.2 billion and earnings per share of $ 1.50. “Our recent talks suggest that investors expect Apple to announce solid, but not good, quarterly results in December,” Morgan Stanley analysts wrote in a recent report. “We do not agree with this and believe that Apple is likely to report quarterly revenue and earnings on a quarterly basis. “In our opinion, the iPhone 12 has been Apple’s most successful product launch for the past five years,” they said. More on that later. Either way, the numbers look robust. The Innovation Machine AAPL stopped providing guidance last year – like many other companies that are unsure of the impact of COVID-19 on their sales. In March, no one knew what the consequences of the pandemic could be or how long it could last. We still do not know, but we have found that the quarantines granted by the city and by the state and the overall fear of being in public have helped many trends that were already rushing up quickly to move forward. The digital transformation has accelerated, and it seems that AAPL may have been well positioned for it. While the iPhone 12 may get the most attention on Wednesday, think back to the last quarter when CEO Tim Cook recorded the records of Mac and Services of all time. Although he did not lead in the last quarter on his own, he did suggest double-digit gains on all product categories, except the iPhone 12, which he said would achieve single-digit gains. FIGURE 1: APPLE LEAVES INDEX IN THE FABRIC. Over the past year, Apple (AAPL – candlestick) has easily surpassed the Nasdaq 100 index (NDX – purple line). Apple shares started up fast in 2021, with investors apparently enthusiastic about the outlook for the first quarter of the first quarter. Data source: Nasdaq. Graph source: the thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results. The Mighty iPhone 5G Launch Despite all the happy talk about fiscal quarterly revenue, the weaker sales of iPhone than expected sales offset the joy and left the shares up by almost 6% in the first few days after the October release of earnings daal. They have meanwhile recovered. AAPL reported $ 26.4 billion in iPhone sales in fiscal quarter, below the $ 27.73 billion expected by Street. Much of the shortfall was attributed to AAPL’s decision to launch the iPhone 12 in this most recent quarter, a move that many believe led consumers to wait for the upgrade before making a purchase. . At the time, some analysts said a move to 5G could eventually be a breeze for the iPhone 12 with sales promotions and subscription bundles. This, combined with the important holiday season that was about to start, could have led to a quick start for the new phone. We will now see if they were right. Analysts are mostly positive about their expectations for iPhone sales, and some believe the delay would have raised iPhone sales from $ 4 billion to the December quarter from the fiscal quarter. The street’s consensus last rose to $ 59.58 billion, better than 6% on a year-on-year basis. But Loup Ventures thinks it’s conservative. It is looking for sales up to 16% year-on-year to $ 64.9 billion, which has increased to 59% of total sales compared to the iPhone’s typical 50% of sales. It is unclear whether this will be the case, but if it is, the trend of reducing iPhones over the past few years will be less than AAPL’s total revenue. The company emphasized the growth in services. Remember, we are only two years away from January 2019, when Cook sent a letter to AAPL investors warning about a fiscal quarter of first-quarter revenue, due in part to weak iPhone sales in China. How things have changed. AAPL earnings and options activity AAPL is expected to report an adjusted gain of $ 1.41, compared to $ 1.25 in the previous quarter, according to third-party consensus analysts. Revenue is forecast at $ 103.01 billion, up 16.4% from a year ago. According to the Market Maker Move indicator on the thinkorswim® platform, the options market has released an expected share price movement of 6.2% in both directions around earnings. If we look at the expiration of the January 29 options, the positions were active during the 125 and 135 strikes. But it was dwarfed by activity to the upward, heavy call volume during the strikes of 145 and 150. The implied volatility is on the 34th percentile from Tuesday morning. Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a specified period. Homework and their tools The work-and-study-from-home phenomenon helped drive sales of Macs and iPads last year, and analysts expect the trend to continue into the first quarter of the year. A number of bells and whistles have been added to new iPads and iPad Airs, and new computers with AAPL’s custom M1 chip replacing the Intel Corporation (NASDAQ: INTC) chip are also coming to market. AAPL is also reportedly working on a new iPad Pro which is expected to be released in mid-March. There is also talk on Wall Street that AAPL may have patented a new version of the Magic Keyboard for the iPad Pro. Given Cook’s comments on the ‘most productive product launch period’, analysts expect to hear about other new products available online. An update to the MacBook Air is one of the possible developments. AAPL is working on a thinner and lighter version of the MacBook Air, Bloomberg reported late last week, referring to people with knowledge of it. Analysts have said they want to know if the planned release is on track in the second half of this year. Analysts from Monness, Crespi, Hardt & Co. expects AAPL to shed light on several new products and services, including how sales are going for its $ 549 AirPods Max over-the-ear headphones and the subscription Apple Fitness + offering, plus ways to merge services. together for discounts. “In our opinion, Apple’s portfolio was better than ever in the last holiday season, while the product and service updates Planet Apple finds in 2021 well,” the team wrote. And so much more among the many reasons that the earnings of AAPL are such a magnet goes beyond products. Other factors that underscore the company’s progress range from privacy issues to app developer fees to government interventions and the general economy. AAPL has done much to address many of these issues, but each quarter tends to introduce a fresh harvest. In November, for example, AAPL said it would halve the commission that would reduce the smaller developers who sell software through the App Store and generate less than $ 1 million in sales. The original 30% AAPL survey has long fueled complaints from developers, users and governments about its dominance in the digital world. The price reduction to 15% has satisfied some, but not all stakeholders and analysts hope the company will pay attention to how the cuts in the early weeks come up. Another question regarding earnings is AAPL’s cash position. The total cash is about $ 192 billion at the end of the company’s fiscal quarter, with about $ 112 billion in debt and a little over $ 79 billion in cash. AAPL returned nearly $ 22 billion to shareholders in the form of repurchases and dividends. Investors can expect to see even more of that, according to Loup Ventures, which estimates that an additional $ 73 billion will be returned in the coming years. TD Ameritrade® comments for educational purposes only. SIPC member. Options pose risks and are not suitable for all investors. Read the characteristics and risks of standardized options. Photo by Trac Vu on Unsplash See more of Benzinga Click here for options of Benzinga Boeing earnings ahead: Personnel cuts in review, spending on aerospace and the new “unrounded” 737 MAX Earnings continue with Johnson & Johnson, 3M early, followed by Microsoft later © 2021 Benzinga .com. Benzinga does not provide investment advice. All rights reserved.