Apple Stock Rides the 4S Express Last Week, Earnings the Next Sign Post

Apple (NASDAQ:AAPL) debuted the iPhone 4S this past Friday and was able to draw huge crowds in the U.S., Australia, Canada, France, Germany, Japan and the U.K., wanting to get their hands on iPhone 4S. Today the company confirmed that sales crossed the 4 million mark over the weekend, beating the previous record of 1.7 million set for iPhone 4 last year.

The company’s stock has had a nice run-up of 10% during the last week and stood pat on Monday as markets await earnings on Tuesday after the close. Apple’s stock could have also indirectly gained from the fact that its competitor Research in Motion (NASDAQ:RIMM) struggled for days to fix an international outage of its email and messaging services, frustrating its subscribers. This disruption could cause many users to lose trust in BlackBerry services and shift away to iPhone.

As we pointed out in our preview note (see Apple Earnings Preview: What We’re Watching Post-Jobs), we expect Apple to post strong results again as the company seems to have ironed out its supply chain issues for the iPad and released a refreshed look of MacBook Air, Mac Mini and OS X Lion.

The key items to watch out for during the release will be Tim Cook’s guidance for the future along with the sales figures for the MacBook and iPad as well as any indications of gross margin impact due to increasing competition from Research in Motion (NASDAQ:RIMM), Nokia (NYSE:NOK) and Motorola Mobility (NYSE:MMI) in the smartphone market, and Amazon (NASDAQ:AMZN), RIM and Motorola Mobility in the tablet market.

We believe that Apple could again surprise markets with stellar results, and the momentum to Apple’s stock could continue in the near term (see Apple Earnings Preview: What We’re Watching Post-Jobs). Our $510 price estimate for Apple stock is about 20% above market price.

See our complete analysis for Apple stock here

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