As negativity has been swelling around Apple (NASDAQ:AAPL) in recent weeks, Tuesday’s earnings report could cause a big move in the company’s stock price. Given the current negativity, it seems likely that shares will drop after quarterly earnings are released, but movement on the stock chart could easily go either way.
Expectations have been set quite low for Apple’s second quarter earnings results. Data from FactSet puts consensus estimates at $10.01 per share, or $42.4 billion, for the second quarter. This compares to earnings of $12.30 per share and revenue of $39.2 billion reported in the year-ago quarter.
A big part of stockholder concern is over Apple’s third quarter. Wall Street expects a 10 percent gain in revenue over the same period last year, but some estimates are being lowered, as Apple doesn’t have a lot of hype about new products making this particular quarter look appealing. In addition, reports from key Apple suppliers have suggested weakened demand for Apple’s devices, indicating that revenue could be weakened.
Apple shares are currently priced below all of the price targets compiled by Thomson Reuters, but a majority of analysts are still rating the stock a Buy. The earnings call could change things significantly. If Apple’s reported earnings fall below expectations, the stock could plunge, and the third quarter forecast would likely sour as well. However, if Apple beats the expectations, the stock could have a quick turnaround.
According to Bloomberg, analysts have been underestimating Apple for a long time, and Apple has only failed to beat expectations 3 times since 2003. Even if its revenue went down slightly, its profits could not be ignored; after all, it is the most profitable company in the technology industry, able to top Google’s and Microsoft’s profits combined.
Either way, Tuesday will prove to be a big day for investors.
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