Stock of the day 20/07/2015 – Apple Inc

After the fairly spectacular second quarter results for Google and Netflix, and the euphoric market reaction that greeted both stocks, the pressure is on Apple to keep up its place at the top of the tech pile.

The company announces its third quarter results on Tuesday after the closing bell.

Of course, it wouldn’t be Apple without a year full of records; after opening 2015 at $111.14, the stock was achingly close to reaching $120 for the first time at the end of January, following its stellar first quarter earnings release, but couldn’t manage that feat until February 10th.

Yet just a few weeks later Apple had already surpassed $130, and after a 6 week stint in a $125 to $129 trading bracket, the stock hit an all-time intraday high of $136.18 on April 28th following its Q2 results. A dip back to the aforementioned trading bracket was to follow, and a steady slide across June, and a 5% decline in the second week of July, pushed Apple to a 5 month low of $119.25. However the robust gains for Netflix and Google appears to have lifted the company away from these lows as investord salivate at the thought of similar growth for Apple; the stock is at a current trading price of $129.62 (IT-Finance.com, 20/07/2015).


(Source: IT-Finance.com 20/07/2015)

In terms of its first quarter results back in January, Apple knocked it out of the park, to put it mildly. Despite a hefty 21% decline in iPad sales, the company saw quarterly revenue of $74.6 billion, far above the $67.69 billion forecast, and a staggering $17 billion higher than for the same period the year before. The main thrust behind this growth was, of course, the iPhone, which hit a record 74.5 million unit sales for the quarter.

These figures set a very high bar for the company to overcome with its second quarter results, figures that importantly didn’t have the Christmas boost. However, once again Apple impressed, with revenue of $58.01 billion against estimates of $55.53 billion, whilst earnings per share were at $2.33 against analyst expectations of $2.16. The iPad continued its slide, meaning the company’s Mac products crept higher than the tablet in terms of sales; however, the focus as ever was on the iPhone, and the company’s star product saw 61.2 million sales against 43.7 million in the same period the year before.

After a phenomenal fiscal 2015 so far, analysts are expecting big things from the third quarter; revenue is forecast to be $49.26 billion compared to $37.43 billion year-on-year, alongside earnings per share of $1.80 against $1.28 for the same period in 2014. Crucially, iPhone sales for the quarter are expected to jump over 40% year-on-year to 49.4 million, significant due to the 70% of total revenue the product contributes.

Investors will also be interested to see how the Apple Watch has performed after a its impressive launch considering sales have supposedly seen a sharp decline in the following months, whilst any information on Apple Pay’s UK debut and the initial progress of Spotify and Tidal rival Apple Music will be much-scrutinised. With that $130 mark once again in its sights, Apple has a consensus rating of ‘buy’ and an average target price of $137.88.

Monday’s stock news:

The M&A machine is never quiet for long, and this morning multinational IT firm Aveva Group was the latest beneficiary, as it surged by nearly 26% to £22.29 following the announcement of a £.13 billion reverse-takeover by Schneider Electric.

Similarly, Ladbrokes is closing in on a deal to purchase Gala Coral, a move that would create a veritable gambling monolith, both online and in brick-and-mortar betting shops. Creating a company worth £3.5 billion, the deal would see Ladbrokes/Coral eclipse William Hill as the biggest betting agent; understandably, this news has seen Ladbrokes leap by over 2% this morning to £1.31.