Stock of the day 26/01/2015 – Apple Inc

Apple is a perennial favourite with consumers and investors alike, with the slightest announcement from the company sending waves through the internet. Tomorrow sees Apple announce an iPhone propelled Q1 2015 earnings release after the closing bell.

Apple split its stocks 7-1 in June, leading to an odd looking chart on paper. However, anyway you cut it the company had a good year. 2014 opened at $555.75, and hit its pre-split high in the final trading day before the division at a price of $651.24. On the day of the split, Apple now traded at $92.65, in a move designed to make the expensive Apple stock more appealing to the average investors and increase its chances of making its blue-chip debut on the Dow Jones Industrial Average. After the split, Apple briefly fell to a low of $89.69 but crossed $100 in August and hasn’t looked back since, reaching its post-split high of $119.25 in November. The company opened the year at $111.14, and grew to $113.80 at the start of this week.



With the news last week that CEO Tim Cook earned a 40% pay rise in 2014, making a cool $9.2 million, expectations are high surrounding the announcement tomorrow. However, analysts are predicting that Apple won’t disappoint. Last quarter saw 16% year-on-year growth in iPhone sales; following the news that Chinese consumers are now buying more iPhones than in the US, analysts expect this quarter to see more than 30% growth to nearly 70 million units sold. Since the new iPhones were only available from September this release will be key in evaluating the success of the latest round of mobile releases.

It is not all good news; after suffering a 12% fall in sales last quarter, the iPad is becoming the lame duck of Apple’s product portfolio, as the iPhone remains strong and Macs buck the declining trend in PC sales. Analysts are not expecting any major turnaround in the iPad despite a big reduction in price that has now seen the cheapest iPad be priced at under $200.

Regardless, Apple continue the forward march to the future, with this year likely to see the release of the Apple Watch, an item that has had a rather mixed public reaction, as well as the ever-growing progress of Apple Pay, the company’s attempt to siphon money away from eBay’s Paypal service. There is also news that Apple might be making moves to replace Intel’s x86 chips in Macs with its own, further increasing its attempts at technological domination.

However, whilst this is all well and good, investors will want to be hearing strong numbers, and analysts’ forecasts suggest that they will be rather happy. The average revenue forecast is $67.5 billion, compared to $57.59 billion last year and Apple’s own prediction of $63.5 billion and $66.5 billion from October; earnings per share are also expected to rise, from $2.07 to $2.59 year-on-year. With Microsoft announcing later today, and Google on Thursday, if these figures come in on target Apple will be well-equipped to continue the battle with its fellow tech-giants.