Strong Apple earnings expected to offset recent 'profit taking'
A recent downturn in Apple's stock has been dismissed as simply "profit taking" ahead of this week's earnings report, in which Apple is expected to exceed Wall Street expectations.
Apple will report its earnings for the March quarter on Tuesday after the markets close. The results will be disclosed following a tumultuous few weeks for the stock, which saw it drop 11 percent, led by the company's single largest one-day point drop plunge of $25.10.
Analyst Brian White with Topeka Capital Markets isn't concerned about the recent volatility with AAPL stock. He sees the 11 percent drop in recent weeks as "profit taking," rather than any legitimate concerns over Apple's business.
White has forecast sales of 29.6 million iPhones in the March quarter, along with 11.58 million iPads. He believes both of those have upside potential, as the iPhone has continued to expand and the new iPad sold a record 3 million units over its launch weekend.
Chris Whitmore with Deutsche Bank also has high hopes ahead of Tuesday's earnings report, as he expects Apple to beat consensus revenue and earnings per share estimates of $35.9 billion and $9.78, respectively. He has modeled for Apple to report sales of 26 million iPhones, 10 million iPads and 4.5 million Macs, though he noted that the iPhone number is "conservative."
Whitmore expects that demand for the iPhone 4S will be moderate this summer, as consumers begin to anticipate and wait for Apple's next-generation iPhone, expected to arrive this fall.
In addition to a new iPhone, both Whitmore and White also believe that Apple could launch its long-rumored television set later this year. White also cited the rumored "iPad mini" as a device he expects will see the light of day later this year.
Both analysts also expect that Apple will issue its traditional conservative outlook for the next quarter, as the June quarter is expected to be particularly uncertain with with the performance of the iPhone 4S ahead of this fall's expected iPhone revamp.
That take, shared by both White and Whitmore, is different from Sterne Agee's Shaw Wu, who said last week that he believes Apple's guidance for the June quarter may be less conservative than usual. He cited particularly strong sales of both the iPhone and iPad as reason that Apple may want to be more aggressive in its guidance.
Apple will report its earnings for the March quarter on Tuesday after the markets close. The results will be disclosed following a tumultuous few weeks for the stock, which saw it drop 11 percent, led by the company's single largest one-day point drop plunge of $25.10.
Analyst Brian White with Topeka Capital Markets isn't concerned about the recent volatility with AAPL stock. He sees the 11 percent drop in recent weeks as "profit taking," rather than any legitimate concerns over Apple's business.
White has forecast sales of 29.6 million iPhones in the March quarter, along with 11.58 million iPads. He believes both of those have upside potential, as the iPhone has continued to expand and the new iPad sold a record 3 million units over its launch weekend.
Chris Whitmore with Deutsche Bank also has high hopes ahead of Tuesday's earnings report, as he expects Apple to beat consensus revenue and earnings per share estimates of $35.9 billion and $9.78, respectively. He has modeled for Apple to report sales of 26 million iPhones, 10 million iPads and 4.5 million Macs, though he noted that the iPhone number is "conservative."
Whitmore expects that demand for the iPhone 4S will be moderate this summer, as consumers begin to anticipate and wait for Apple's next-generation iPhone, expected to arrive this fall.
In addition to a new iPhone, both Whitmore and White also believe that Apple could launch its long-rumored television set later this year. White also cited the rumored "iPad mini" as a device he expects will see the light of day later this year.
Both analysts also expect that Apple will issue its traditional conservative outlook for the next quarter, as the June quarter is expected to be particularly uncertain with with the performance of the iPhone 4S ahead of this fall's expected iPhone revamp.
That take, shared by both White and Whitmore, is different from Sterne Agee's Shaw Wu, who said last week that he believes Apple's guidance for the June quarter may be less conservative than usual. He cited particularly strong sales of both the iPhone and iPad as reason that Apple may want to be more aggressive in its guidance.
Comments
I am confident Apple will beat the pro analyst average of 10 EPS. But to maintain its price Apple needs to beat 11 EPS and to rise it needs 12+ EPS. Independant analyst average is about 12 EPS and the lastest whisper is 12.3
If we get 12+ EPS we are ok but it this is very close. The risk is very high.
I have the following calls in play for earnings:
1 july 600 call, break even is 640
1 august 550 call, break even is 600
1 january 2013 550 call, break even is 620
1 january 2013 600 call, break even is 670
Bought back in today.
Quote:
1 july 600 call, break even is 640
1 august 550 call, break even is 600
1 january 2013 550 call, break even is 620
1 january 2013 600 call, break even is 670
That is a lot of money invested in the options - i think that's about $25K-$30K in options.
I just bought one option - 1 January 2013 605 call, break even 660.
Debating whether to buy one more?
I am sure you have read this famous quote by Warren Buffett about speculation and investing. I am long Apple as I do not know what will happen in the short term. Best of luck though.
The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands.
My most recent market success is LQMT - Liquid Metal...
After all the recent discussion, I did some research and bought in at $0.162
I bought some more at $0.199
Today it's at $0.52 - $0.62...
The big question is can it maintain this price for 6 months???
Edit: After reading the Buffett quote above... I totally agree with it!
However, most of my investments are solid, but every once in a while I like to take a risk with a small enough amount of capital that I can afford to lose it all... This is entertainment -- like playing roulette, betting the odds and waiting for a good streak.
Quote:
Originally Posted by Dick Applebaum
My most recent market success is LQMT - Liquid Metal...
After all the recent discussion, I did some research and bought in at $0.162
I bought some more at $0.199
Today it's at $0.52 - $0.62...
The big question is can it maintain this price for 6 months???
Take 1/3 off the table now, and even if it tanks, you will not lose money.
Well I rather have more expensive options that have a better chance of working than short term ones that will get hit very hard by the volatility drop after earnings. Volatility is so high that someone could lose money with April calls even if the stock jump at earning.
The options premiums drop after earning is going to be brutal.
Quote:
Originally Posted by TeeJay2012
I am sure you have read this famous quote by Warren Buffett about speculation and investing. I am long Apple as I do not know what will happen in the short term. Best of luck though.
The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands.
Good to see you don't understand Buffet's statement, seeing as Apple with > $100 Billion Cash/Equities on hand to their $530 Billion market value is a mere 5.3:1. That's most certainly not a gigantic valuation relative to their cash flow.
This morning was a great time to buy.
As far as earnings go, I get nervous when people start throwing around 30MM iPhones at an ASP of $620. If they managed to sell something insane like 35MM, the ASP will be closer to $550-570. $9 per share is nothing to sneer at (50% yoy growth), and in some ways that would make me more comfortable than $12. They can keep up 50% growth a lot longer than 100%.
Wow... I had missed that. People complaining that they never get a chance missed yet another gift.
Quote:
Originally Posted by mdriftmeyer
Good to see you don't understand Buffet's statement, seeing as Apple with > $100 Billion Cash/Equities on hand to their $530 Billion market value is a mere 5.3:1. That's most certainly not a gigantic valuation relative to their cash flow.
And so it has been for the last several years - somewhere a little less or more than 5:1. I wouldn't call it a direct correlation, but because market value has never gone stratospheric in relation to book, I take it as a good sign that there is no such thing existing at present as an Apple "bubble." Should that multiple increase significantly in the future, I'd start to investigate whether market exuberance is afoot.
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Originally Posted by Rogifan
I think Apple will beat expectations as they usually do, but still all the analyst predictions are BS. Especially the ones predicting $1000 stock price and $1T maket cap. Just ridiculous IMO.
I totally agree with you Rogifan.
It amuses me how many negatives have recently been drummed up on Apple. How silly many of they are.
I'm not into the short term price movements caused by the market game players. Longer term fundamentals are what I follow.
Anyway I'm expecting tomorrows AAPL Q report to be quite interesting.
Quote:
Originally Posted by aaarrrgggh
Wow... I had missed that. People complaining that they never get a chance missed yet another gift.
It's only a gift if the shares go up. I don't think those people who bought in at $640 will be feeling too good right now.
Presumably if they miss the estimates the shares will go down further. Share trading is always a gamble.
It's throwing me off..
Actually I think any miss in earnings would be a good time to buy some back if you sold some above 600 already.
But if you're still holding 100%, no way would i want to catch the falling knife.
I think there's no entry point above 550, whether fundamentally or technically, unless it's just buying back what you've taken off.
Remember, they are missing a week this time. Had an extra one last quarter...
That's about $3,3 billion less than if they had the week in.
Still think they will beat expectations, but we might see another selloff after the inevitable rally if/when they do beat.