Apple’s share price ticks up ahead of Q3 earnings

27 Jul 2022 02:57 PM

Apple’s share price ticks up ahead of Q3 earnings

Apple’s share price saw a surge in volatility in late April when it posted its second quarter update. The figures for the three-month period were impressive but the stark warning that supply chain issues could impact sales by up to $8 billion took away from the various metrics. Revenue increased by 8.5% to $97.28 billion, comfortably beating the $93.89 billion forecast. Revenue derived from iPhone sales increased by over 5% to $50.57 billion. Revenue from services jumped by 17.2% to $19.82 billion. In recent years Apple have been making a concerted effort to derive a larger portion of their revenue from services, so it is encouraging to see that services revenue growth is outstripping revenue growth from iPhones. Mac and iPad revenue came in at $7.65 billion and $10.44 billion respectively, and both metrics exceeded forecasts. Earnings per share was $1.52 and that came in better than expected as analysts were anticipating $1.43.

Global supply chains have not run as smoothly as they did in 2019, and the recent lookdowns in China have contributed to the problems. Although Apple cautioned that billions could be lost in revenue from supply chain problems, it still increased its dividend by 5% to 23 cents. Also, $90 billion worth of share buybacks were announced. With such generous returns to shareholders the tech group is clearly not that worried about the current economic environment. Looking ahead to the third quarter numbers, any changes to the dividend or share buybacks could be a sign the firm is a little more cautious. There are growing concerns about rising costs and dwindling consumer appetite, but it is believed that Apple’s customers are above average earners, and therefore they are in a better position to shake off the slightly less rosy economic climate.

Apple’s share price tumbled to a one-year low in mid-June, and that coincided with the broader selloff in the markets. Around the same time, the S&P 500 tumbled to an 18-month low, so Apple still outperformed the index. Back then, worries about the Federal Reserve carrying out several large rates hikes this year were in circulation, but since then some of those worries have faded.

Recently, Apple’s share price has been rallying and last Friday it hit its highest mark in six weeks, which speaks to a strong recovery. While it holds above the $143.00 mark, the recent upward move should continue, resistance might be found at $166.00. A break below $143.00, could bring $134.00 into play.

Apple will post its third quarter figures on Thursday 28 July. Analysts are expecting EPS to be $1.16, and gross margin is tipped to be 42-43%.

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