Apple share price: Q3 earnings preview

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Apple Q3 results are expected to show a marked decline from the previous quarter.

Source: Bloomberg

 

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 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Wednesday 21 July 2021 

When are the Apple results?

Apple Inc. the world’s largest company by market capitalisation in the UK, is set to report quarter three (Q3) 2021 earnings on 27 July 2021.

What ‘the Street’ expects from Apple Q3 2021 results?

Due to the Covid-19 pandemics' disruption on global business and in turn supply chains, Apple Inc. currently does not issue forward guidance for its quarterly results. However, Q3 2021 results do follow on from what was a very strong second quarter for the group, where record revenue was reported in each of the company’s geographic segments.

Q3 is however expected to see chip shortages due to supply chain disruption affecting Ipad and Mac sales. This could provide a $3 billion to $4 billion headwind in revenue for new product lines within this segment, which have seemingly drawn increased demand in 2021. iPad and Mac sales account for just over 15% in group revenue.

iPhone sales account for around 60% of total revenue and early indications are that sales within the groups largest market, North America, have been robust. Consumer intelligence research partners have suggested that Apple’s third quarter iPhone sales in the US could have captured around 63% of the market over this period.

Year on year (YoY) revenue growth for the company could be in excess of 20%, although the expectation is for a notable decline quarter on quarter (q/q).

A consensus of estimates for the upcoming Q3 2021 Apple results arrive at the following:

• Revenue for the quarter of $72.780 billion
• Earnings per share (EPS) for the quarter of $0.99

How to trade Apple results

In terms of an institutional view as of 20 July 2021, a Refinitiv poll of 41 analysts have an average rating of ‘buy’ for Apple, with a long-term price target (mean) of $159.73.

Source: Refinitiv

 

In terms of a retail trading view, as of 20 July 2021, 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.

Discover how to buy, sell and short Apple shares

Source: IG

Apple share price – technical view

The share price of Apple has recently broken out of a bullish triangle consolidation pattern. The triangle and breakout is a suggestion that the longer-term uptrend is being continued. In the short term however, the index is correcting from overbought territory.

The short-term correction within the longer-term uptrend suggests a second opportunity for long entry for breakout traders. The correction is however still underway with a confluence of both triangle and trend line support at around the $132.50 level. Traders of the pattern might prefer to see a bullish price reversal closer to the confluence of support ($132.50) before considering new long entries into Apple. In this scenario, $160.50 becomes a longer-term projected target, while a close below the support low instead at $122.75, would consider the bullish assumptions to have failed.

Source: IG charts

Summary

• Q3 2021 results are scheduled for the 27 July
• Supply chain disruptions are expected to impact iPad and Mac sales over the period
• Revenue for the quarter is estimated at $72.780 billion
• EPS for the quarter are estimated at $0.99
• The average broker rating for Apple Inc. remains ‘buy’
• The average long-term broker price target for Apple is $159.73
• The majority 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, although the share price is currently correcting from overbought territory