Was an investor, if he approaches the latest business figures from the iPhone group Apple in a reasonably objective manner, he can actually only comment on a few small things. But: Apple is not just any company. The expectations of the American tech group were once again (too) high when the balance sheet was presented recently.
Apple was not quite able to meet these expectations, so the share price of the group with the apple in the logo had to go into reverse gear in the days after the figures were published. Such a rather rare decline could also be an entry opportunity. Various balance sheet publications in recent years and the related price development of the Apple share show enough examples of this.
Fueled expectations
Apple itself had fueled the expectations in advance this time. Since the beginning of 2023, the stock had jumped more than 52 percent to an all-time high of $198. Thanks to this rally, Apple achieved something historic at the end of July. For the first time, a company’s market capitalization exceeded the $3 trillion mark. The negative market reaction that followed the figures published on August 3 had several reasons.
On the one hand, many investors may have simply taken profits after the strong run of the share. In addition, August 2023 has so far lived up to its reputation as a seasonally weak stock market month, so that many share prices have developed weakly overall compared to the first seven months of this year. In addition, investors also found one or two hairs in the soup in Apple’s latest quarterly report:
Among other things, Apple had announced a further decline in sales for the current fourth quarter (as of the end of September) of the group in the 2022/23 financial year. This should be 1 percent. It would be the fourth decline in sales in a quarter in a row. Something you are not used to from Apple at all. The forecast is also below the consensus estimates. Analysts had previously expected a slight increase in sales of 0.5 percent.
Are the current courses an entry opportunity?
In the June quarter, on the other hand, expectations were beaten. Revenue was $81.79 billion, down 1 percent, while adjusted earnings per share (EPS) were $1.26. Consensus estimates for sales and earnings per share were $81.55 billion and $1.20, respectively.
Despite this, Apple shares fell 4.8 percent on the day after the figures were announced. It was the weakest day of the year and the highest daily loss since September 29, 2022. Further losses followed, but a number of investors should use them to get started. Citi analyst Atif Malik, among others, advises this.
He continues to hold a buy rating on Apple stock with a price target of $240 following the release. This would currently correspond to a price potential of around 33 percent. In addition, Apple stock was put on a so-called “90-day positive catalyst watch”. The background is a look into the past: Specifically, it is about the performance of Apple shares in the period between the announcement of the results for the June quarter and the presentation of new iPhone models. This takes place in September.
According to Malik, Apple stock has outperformed the Nasdaq index on five out of seven occasions since 2016 and the broad S&P 500 index on all seven occasions by an average of 8 percent during this period. Another reason to buy is the growth in services sales.
One thing is also certain: Apple will remain an “iPhone group” for the time being, even if sales in the area of services – for example streaming music or films and series – were already 21.2 billion dollars in the past quarter. They grew by 8 percent compared to the previous year. This business is also lucrative. Group-wide, the gross margin recently reached 44.5 percent. A new record for a June quarter.
A look at the number of Apple devices in circulation shows what additional potential is lurking in the services area. The number of iPhones, iPads or Macs used by users has grown to a record 2 billion. All kinds of other suitable services can be offered around this Apple universe, so that Apple’s success story should also continue for the shareholders.
There is no comparable company with such a broad following and a constant willingness to purchase new products and use new services. The jump in market capitalization above 3 trillion dollars should therefore once again only be an intermediate step towards further records. A look at the long-term chart of Apple shares is enough to see this.
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