This Thursday it’s time for Apple $AAPL, the most valuable company in the world, to report its earnings. Apple are reporting on what is likely to have been a transitional quarter for the company’s iPhone business. Here we have summed up some information that’s good to have in mind before deciding on investing before the report.
Analyst Highlighting Average Selling Price
According to Bernstein’s top analyst Toni Sacconaghi 🕵️♂️, Apple is likely to report a huge surge in Average Selling Price (ASP). In other words, the average price at which Apple are selling their products.
“We estimate that ASPs could be significantly higher than consensus”, Sacconaghi said in a note published Wednesday. At the same time, he raised 📈 his price target for Apple to $225 from $200 🎯 and maintained a rating of Market Perform for the stock. Sacconaghi is forecasting an ASP of $800 — which would be a record average selling price for Apple, and an increase of 29% from the same period last year.
New iPhones in Focus
The new iPhones that was introduced last month (XS & XR) are quote expensive. the XS model starts $750, and if you want to get your hands on the priciest model you have to splash $1,449. A pretty large price hike compared to previous models. The starting price is $100 more than the iPhone 7 cost two years ago can give be a boost for profits in the quarter. Tim Cook says the new iPhones are so expensive because they replace most other gadgets you’d need. “The phone has replaced your digital camera… It’s replaced your video camera. It’s replaced your music player. It’s replaced all of these different devices”, Cook said.
CIRP (Consumer Intelligence Research Partners) says its data shows that early iPhone XS sales were strong in the mere ten days that they were available in the quarter; CIRP states that the new iPhone models each accounted for 8% of US iPhone sales during this time. CIRP also supports Sacconaghi’s claim that the new iPhone should boost Apple’s Average Selling Price to unprecedented levels.
Investment firm Jefferies initiated coverage of Apple’s stock with a Buy rating📈 and a $265 price target 🎯 on Monday, estimating the tech giant can build “a massive” services business on its core iPhone business.
“We believe Apple’s stable iPhone business will serve as the foundation upon which it can build a massive, recurring and high margin Services business,” Jefferies analyst Timothy O’Shea🕵️♂️ said in a note.
Want to know more about the new features on iPhone XS & XR?
▶️ Check out this video!
China Another Key Factor
Forbes also points out that Apple’s business in China will also be a key factor to watch. For instance, Goldman Sachs has indicated that consumer demand in China could be rapidly slowing down, with smartphone sales over the last quarter likely to have dipped 15% year-over-year. That said, Apple could partly offset this weakness with the launch of the new iPhones, which are likely to find favor with customers given the availability of larger screens and a new gold color option.
Wall Street’s Estimates:
Revenue (Average Estimate): $61.57 Billion
Earnings Per Share (Average Estimate): $2.78 /share