The earnings report for the June quarter will be released after the close on Tuesday and is surrounded by a cloud of investor worries. This could be an excellent foundation for the second largest company in the world by market capitalization.
Apple (ticker: AAPL) has been declining lately. In the March quarter, revenue decreased 5% yoy to $ 58 billion, and profits declined 10%. A key problem is that sales of Apple iPhones have declined due to weaker demand in China, where the company has been dented by continued US / China trade pressure and consumers' reluctance to shake new phone purchases. Apple reported a 17% decline in iPhone sales in the March quarter compared to the previous year. The iPhone product cycle in September 2019 is expected to bring only modest hardware upgrades, with the introduction of faster 5G phones expected in the fall of 2020.
In the meantime, investors are looking forward to the results of the accelerated introduction of services by the company. Services revenue grew 16% in the March quarter, but this is an improvement on the launch of the key new services announced earlier this year, including the Apple TV + streaming video service and the Apple Card credit card Cooperation with Goldman Sachs.  For the quarter, Wall Street analysts expect $ 53.3 billion in revenue for the third quarter, with earnings of $ 2.09 per share. Apple's own forecast included revenues of $ 52.5 to $ 54.5 billion, gross margins of 37 to 38 percent, operating expenses of 8.7 to 8.8 percent, other revenue of $ 250 million and a tax rate of $ 16.5 percent ahead.
For the September quarter, Street Consensus expects revenues of $ 60.98 billion and earnings per share of $ 2.66.
In addition to the focus on services and iPhone sales, investors are looking for information on the company's business in China and the anger of the Trump administration over Apple's plan to Mac Pro in China and not in the USA build. You will also be looking for details on the financial implications of the upcoming acquisition
'S (INTC) modem business, responding to the news that the Justice Department has begun to deal with the power of large tech platform companies, and growing control of the company's 30% commission on App Store sales.
UBS Analyst Timothy Arcuri said Monday discussions with investors point to low expectations for the quarter and fall for iPhones, with particular concern for growth in both China and the service sector , Nevertheless, he reiterated his buy rating for the stock and raised his price target from $ 225 to $ 235. Many investors are ready to leave the 2019 phone cycle behind and look forward to a stronger cycle in 2020 with the arrival of 5G phones.
JPMorgan The analyst Samik Chatterjee who has an overweight rating and a price target of $ 239 for the stock, believes that the bears expect the worries over the trade to be the gains and prospects While the cops are encouraged by the potential for positive surprises in iPhone broadcasts.
According to Chatterjee, recent supply chain reviews suggest headwinds are easing and investor expectations for the September quarter may be positively affected.
Morgan Stanley Katy Huberty wrote in a research report last week that negative investor sentiment despite improved iPhone and service data points and low expectations for the September quarter for a "positive build "Repeatedly overweighted their overweight and raised their price target from $ 231 to $ 247. Huberty writes that there is a "clear catalyst path beyond profit" that makes the Apple stock a top pick for the second half of the year.
Wedbush Analyst Daniel Ive s, who maintains an outperforming rating and a target price of $ 235, says his own checks state that "the demand for stable iPhones around the world with some puts in the crucial September quarter and overall we would call that better than feared in the face of a very busy Cupertino time. He adds that the service business remains a "hub" for Apple's valuation – he thinks the business is worth $ 400 to $ 450 billion and is still in the early stages of monetization. "China is still a wild card," he writes, "we are optimistic about Apple's future in FY20 and beyond."
Apple rose $ 1.61 or 0.8% to $ 209.35 on Monday morning.
Write to Eric J. Savitz at [email protected]