Will Apple Stock Bounce Back Post Q2 Results?

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Apple

Apple (NASDAQ:AAPL) is expected to publish its Q2 FY’22 results on Thursday, April 28. We expect Apple revenue to come in at around $95.5 billion for the quarter, up 6.5% year-over-year and ahead of the consensus estimates of about $94 billion. This is likely to be a Q2 record for the company. We expect earnings to stand at $1.48 per share, an increase of about 5% compared to last year, and marginally ahead of the consensus estimates of $1.43 per share.

So what are the key trends that are likely to drive Apple’s second-quarter earnings?  We expect to see a small year-over-year increase in iPhone revenues, driven by demand for the iPhone 13 handsets and attractive carrier promotions, as U.S. wireless carriers look to get more customers onto high-end 5G plans.  Apple is also expected to have seen some continued growth for its Mac product line, driven by new product launches and the continuation of the remote learning and working trend as the omicron variant of Covid-19 spread through the globe in early 2022. Apple’s services business should also continue to expand driven by strong App store sales and rising subscriptions. Over the December quarter, Apple said that it had 785 million subscriptions on its platform, up by 165 million from last year and the number is likely to rise further. That being said, Apple’s overall year-over-year revenue growth could be limited to an extent by supply issues and ongoing semiconductor shortages. See our interactive dashboard analysis on Apple Earnings Preview for more details on how Apple’s revenues and earnings are likely to trend for the quarter.

Apple stock has declined by about 8% year-to-date, due to the broader sell-off in technology stocks and growth names as investors brace for higher interest rates this year.  However, if Apple’s earnings beat estimates, with signs that the semiconductor supply crunch is easing, it’s very likely that we could see gains in the stock price in the near term. We have a $174 price estimate for Apple stock, which is about 5% ahead of the current market price. See our analysis on Apple Valuation: Is AAPL Stock Expensive Or Cheap? for an overview of what’s driving our price estimate for Apple.

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Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 AAPL Return -4% -6% 478%
 S&P 500 Return -2% -6% 99%
 Trefis Multi-Strategy Portfolio -2% -9% 257%
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[1] Month-to-date and year-to-date as of 4/21/2022
[2] Cumulative total returns since the end of 2016

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