Apple share price: Q1 2022 earnings preview

[MongiIG]

Apple share price: Q1 2022 earnings preview

Apple Q1 earnings to benefit from iPhone 13 and Mac sales.

Source: Bloomberg

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Monday 24 January 2022 

When are the Apple results?

Apple Inc., the world’s largest company by market capitalisation, is set to report first quarter (Q1) 2022 earnings on the 27th of January 2022.

What ‘the Street’ expects from Apple Q1 2022 results

Since the pandemic’s disruption to supply chains and, in turn, the uncertainty pertaining to future earnings, Apple Inc. stopped issuing forward guidance for its quarterly results.

Q1 has historically been the strongest quarter of the year for Apple as it reports on the three months ending December, benefitting from pent-up holiday demand most notably for the latest installment of its iPhone.

iPhone sales led by the iPhone 13 could account for more than 60% of group revenue in the reporting period. High single digit to low double digit growth is expected from Mac sales. Wearables are expected to deliver mid-single digit sales growth while service revenue is likely to see only marginal growth if any.

A consensus of estimates from Refinitiv data for the upcoming Q4 2021 Apple results arrive at the following:

• Revenue for the quarter of $118.547 billion (+6.38% year on year)

• Earnings per share (EPS) for the quarter of $1.89 (+12.37% year on year)

How to trade Apple results

In terms of an institutional view as of the 21st of January 2022, a Refinitiv poll of 43 analysts has an average rating of ‘buy’ for Apple, with a long-term price target (mean) of $180.84.

Source: Refinitiv

 

In terms of a retail trading view, as of the 21st of January 2022, IG Client Sentiment data shows 86% of IG clients with open positions expect the price to rise in the short-term, while 14% expect the price to fall in the near term.

Source: IG

Source: IG charts

 

The share price of Apple continues to correct in the short-term along with the company’s tech sector peers. The correction follows the stock trading in overbought territory and was pre-warned by the head and shoulders chart pattern (shaded). The long-term uptrend for Apple does however remain firmly intact.

Traders respecting the longer term uptrend will be looking for signs that the correction has ended before looking for long entry. The 156.60 level finds a confluence of both trendline and horizontal support and provides the next downside target should the correction persist.

For long entry we are looking for a sharp bullish price reversal before this level, accompanied by a move out of oversold territory from the stochastic oscillator.

Summary

• Q1 2022 results are scheduled for the 27th of January 2022

• Revenue for the quarter of $118.547bn expected

• Earnings per share for the quarter of $1.89 expected

• The average long-term broker rating consensus for Apple is ‘buy’

• 86% 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 in the short-term we are seeing a correction from near term highs