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Apple share price: Q2 2022 earnings preview


MongiIG

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Apple Q2 2022 earnings to grow marginally against a strong comparative in the prior year

AppleSource: Bloomberg
 
 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Friday 22 April 2022 

When are the Apple results?

Apple Inc. the world’s largest company by market capitalization, is set to report second
quarter results on Thursday 28 April 2022.

What ‘the Street’ expects from Apple Q2 2022 results?

Apples upcoming quarter two (Q2) 2022 results find a strong base of comparison in the prior year’s corresponding Q2 2021. Logistical constraints saw a strong proportion of shipping of the then new 5G Iphone offerings move from quarter one (Q1) to Q2 in the 2021 fiscal year. The unwind of hard lockdown parameters over the prior year’s comparative period also saw demand for Mac’s and Ipads boosted on the return to work and reopening of the US economy.

Iphone 13 sales will be the primary driver of revenue in Q2 2022 and should support marginal revenue and earnings growth. While we are now moving to what looks like a post Covid-19 pandemic recovery era, supply chain disruptions will be a factor to consider, especially in lieu of chipsets across products.

A consensus of estimates from Refinitiv data for the upcoming Q2 2022 Apple results arrive at the following:

• Revenue for the quarter of $94.024 billion : +4.98% year on year (YoY)
 Earnings per share (EPS) for the quarter of $1.43 (+2.15% YoY)

How to trade Apple results

In terms of an institutional view as of 21 April 2022, a Refinitiv poll of 46 analysts have an average rating of ‘buy’ for Apple, with a long-term price target (mean) of $193.28. This suggests that the current price as of 21 April 2022 trades at a 16% discount to what is deemed a longer term fair value for the share.

Apple brokersSource: Refinitiv

In terms of a retail trading view, as of 21 April 2022, IG Client Sentiment data shows 88% of IG clients with open positions expect the price to rise in the short term, while 12% expect the price to fall in the near term.

Client sentimentSource: IG

Apple share price – technical view

Apple chartSource: IG charts

The long-term trend for the Apple share price remains up. In the near term we have seen a correction from highs.

The correction has taken the shape of a bullish flag formation (shaded area on chart). This pattern is a suggestion that the preceding uptrend is setting up to continue. A close above flag resistance would confirm the bullish continuation pattern and suggest 179.40 as an initial upside resistance target from the move. Traders who do find long entry into this scenario (should it occur) might consider using a close below the 163.20 level as a stop loss indication for the trade.

Even if the flag breakout we are expecting does not occur we would still keep a long bias to trades on the share, hoping for a bullish price reversal to occur before the price reaches trend line support.

Only on a break of trend line support would we reconsider our long bias to trades on the stock.

Summary

• Q2 2022 results are scheduled for 28 April 2022
• Revenue for the quarter of $94.024 billion expected
• EPS for the quarter of $1.43 expected
• The average long-term broker rating consensus for Apple is ‘buy’
• 88% of IG clients with open positions on Apple expect the price to rise in the near term
• The long-term trend for Apple remains up, with a short term bullish continuation pattern forming

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