Samantha Fischler is a Junior Financial Analyst at I Know First.
Apple Stock Prediction: Will the Apple Fall from the Tree in Q4?
- Apple released its 3rd quarter earnings at market’s close on Tuesday July 26
- The information disclosed shocked investors with much stronger earnings than predicted and sent Apple’s stock soaring
- Even before the earnings call, I Know First was thinking ahead to Q4 and wondered what others were predicting
- I Know First is currently bullish on AAPL for the long term
- Some Information Disclosed in the Earning’s Reports Apple’s quarterly revenue amounted to a total of $42.4 billion, as opposed to Apple’s projection of between 41-43 billion dollars, while analysts believed that revenue would be $42.1 billion. Gross margin was 38% compared to 39.5% year-over-year. A Reuter’s survey concluded with an expectation that Apple’s Q3 earnings per share would be $1.39, a marked decrease from the $1.85 from 2015’s Q3 reports. However, Apple surprised the world with a higher than expected EPS of $1.42. Apple also announced that their revenue from services (think: iTunes, Apple Music, App Store, etc.) had increased increased by 19% year-over-year.
- Apple’s Expectations for Q4 Along with its Q3 financial statements, Apple also released its expectations for its Q4 performance. Apple expects that in its fourth fiscal quarter of 2016, its revenue will be between $45.5 and $45.7 billion, gross margin to be between 37.5-38%, and operating expenses to be somewhere between $6.05-6.15 billion. Apple projects that other net income will amount to $350 million and the company will have a tax rate of 25.5%.
- What do analysts and brokers project for Apple for Q4? Do you want to know what financial advisors, analysts, and other professionals in the finance world are projecting for Apple for the fourth quarter of 2016? Look no further!
Jay Srivatsa is the CEO Future Wealth LLC. Prior to starting Future Wealth LLC, Jay worked as an equity analyst covering technology, media and telecom at various investments banks – Chardan Capital, Euro Pacific Capital, Roth Capital and Wedbush Securities. Prior to his employ on wall street, he worked as a market research analyst at Gartner Inc and IHS Inc and several years as marketing manager at Avago Technologies prior to his market research roles. Jay holds Masters degrees from Stanford University, Santa Clara University and Texas A&M University.
“We believe that Apple stock price is largely dependent on the success of its iPhone 7 launch later this year. There are over 200 million iPhones in the market that over 2 years old and new iPhone 7 with new features should help Apple’s Q4 revenues as well as the stock price. Looking at some of the comments made by its suppliers – Skyworks among others, it appears Apple is ramping up already toward a solid launch later this year. Typically, a new model number comes with it new features while Apple tends to make small modifications to its S, SE versions keeping the same model number. That leads us to believe that Apple 7 could sport several new features – iris, voice recognition among others are possibilities.
Perhaps, the biggest disappointment at Apple has been the CEO Tim Cook’s lack of innovation during his 5-year tenure. Only truly new product was the Apple iWatch that has turned out to be a sales dud. While stepping into Steve Job’s shoes is no easy task, the lack of creativity in its phones has been a major factor in Apple’s weak stock price. As world smartphone demand appears to be saturating, most investors would be looking for signs from Tim that Apple has regained its Mojo.
Going into the earnings call tomorrow, the expectations from Apple are really low. The company missed numbers last time and sales have been largely lackluster this year due to global weakness especially in China and UK. As such, we expect the stock to begin to work its way up from the low levels currently to a $120 price range by end of the year. We would be buyers at these levels.”
Michael Cirelli recently joined SAI Financial Services Inc. as a Financial Advisor. He is the top analyst within the firm. He is currently working on his CFP coursework.
“I have been trading Apple stock and options for 7 years consistently now and I have only been wrong 2 of their quarterly earnings in that entire time. I believe Apple will surprise to the upside and beat Q4 estimates; the street is currently looking for roughly $1.66 EPS in Q4. I predict Apple to deliver a $1.70-1.75 eps for Q4.
I think the car is being downplayed far too much, there’s no secret that Apple has had this project in the pipeline for some time now and a company with this much cash on their balance sheet will certainly produce a product that is going to be very competitive in the automotive space.
Apple also eluded to a very key statistic in their conference call from this past earnings report; Cook said that the number of users switching from Android to Apple over the past 9 months is at an all-time high. A very bullish statistic for a stock that is weaning itself off of iPhone sales and becoming more competitive on the service side…Service revenue saw a big uptick as well this quarter and I expect to see that trend to continue going forward.
I would recommend Apple as a buy and I am currently long the stock, I got long around $98/share. I’d give them a near term (12-18 months) price target of $135/per share and looking at a longer timeframe (18-30 months) I’d set a price target of $160/per share.”
L&F Capital Management, LLC is a quantitative investment management group located in San Diego, California. L&F also provides Equity Research through Seeking Alpha.
“…In numbers, the result was an irregular spike in YoY iPhone unit growth rate to 37% in Fy15. Investors should remember that prior to Fy15 and the iPhone 6, iPhone unit growth rates were steadily decelerating… The 37% growth, then, is an atypical, above-trend spike and YoY declines this year are just putting iPhone growth back on-trend… Our point here is that an above-trend spike in growth followed by a down year is not a signal of a peak. It is simply a return to normalized growth… Analysts are looking for low single-digit revenue growth next year. A rebound to low double-digit growth for iPhones coupled with resurgent iPad and Mac sales and surging Services revenue will surely drive FY17’s sales more than 3.7% higher than this year’s depressed revenue number…
…Not only do we see upside to next year’s analyst estimates, but we also think the stock will benefit from multiple expansion as the market turns favorable on AAPL’s future. The stock has already seen its forward P/E multiple expand from ~10.8x to ~11.6x (+7.4%) in just one day. Clearly, investors are ready to pile into the stock and extend the currently compressed valuation…
…To us, the time feels right to buy into AAPL stock. It is still well-off its mid-2015 highs, the stock just posted its best day in 2 years, the valuation remains cheap, and the iPhone 7 is set tolaunch soon. We think things are setting up for AAPL stock to bounce back to near its 2015 highs.”
Conclusion: I Know First’s Apple Q4 Prediction
I Know First was bullish before and remains bullish on AAPL after the earnings report. For an example of I Know First’s bullish predictions on Apple prior to the release of Q3 earnings, onJune 27th the I Know First algorithm gave a bullish signal of 22.54 for AAPL with a predictability indicator of 0.21 in this 1-month forecast. On July 27th, Apple grew by 10.31% exemplifying the accuracy I Know First’s algorithm.
Future Wealth, LLC is a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted.The information contained in the report does not constitute an offer, or a solicitation of an offer, to buy or sell any securities or other financial instruments, including the securities of companies listed in the report. Investors should not rely solely on the information in the report in making an investment decision.