What Will Apple Inc. (AAPL) Stock Do Around Earnings?

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Apple Inc. (NASDAQ:AAPL) stock sentiment has improved a great deal over the last month or so, meaning that expectations are moving higher ahead of the company’s next earnings report, which is due on Tuesday. The iPhone 7 cycle appears to be turning out better than expected, and we’re hearing that the consumer electronics market is expected to do well over the holiday season, and Apple Inc. (NASDAQ:AAPL) is said to be preparing some additional goodies for release just in time for the holiday shopping season.

Deutsche Bank raises Apple price target

Analysts have been lining up to release their previews for Apple Inc. (NASDAQ:AAPL)’s September quarter earnings. Deutsche Bank analyst Sherri Scribner bumped up her price target for Apple Inc. (NASDAQ:AAPL) stock from $105 to $108 per share and maintained her Hold rating on the company. She remains cautious on the iPhone maker in the long term and believes that the strong outlook for the September and December quarters is now priced into Apple Inc. (NASDAQ:AAPL) stock.

She took into account the increase in build plans at the company’s Asian suppliers and also the boost from promotions by mobile carriers in the U.S. in raising her iPhone unit estimates to 46 million for the September quarter and 75 million for the December quarter. She expects a bit of upside compared to Apple Inc. (NASDAQ:AAPL)’s guidance but believes investor expectations have already readjusted to cover the potential for a beat-and-raise quarter.

She disagrees with most of the rest of Wall Street in terms of the opportunity presented by Samsung’s Galaxy Note 7 flub. Most analysts have been harping on how consumers will instead opt for the iPhone 7 Plus as a replacement for their Note 7 or just instead of a Samsung phone because of all the handsets. However, Scribner sees little opportunity for Apple Inc. (NASDAQ:AAPL) here because she doesn’t believe Android users will jump ship to iOS. Instead, she believes they will switch to another Android phone.

Apple to benefit from strong consumer

Goldman Sachs analysts said in an October 17 report that holiday spending will be strong this year. They look for a number of beat-and-raise quarters from companies that will benefit from channel fill and holiday sell-in. In their recent survey, one of the questions they asked was about which consumer electronics respondents expect to buy this year, and the responses pointed to better spending intentions in almost all categories.

More specifically, they found strong purchase intentions for every category of consumer electronics device except one: Apple Inc. (NASDAQ:AAPL)’s iPad:


Apple stock set up for 4.5% move around earnings

Stifel analyst Brian Donlin offered up an options strategy for trading Apple Inc. (NASDAQ:AAPL) stock around next week’s earnings report. As of October 18, he said the options market was pricing in a move of 4.5% in Apple Inc. (NASDAQ:AAPL) stock either way in association with the earnings report. This is roughly in line with the average one-day absolute price move after the earnings release, which is 4.8%.

He adds that sentiment on Apple Inc. (NASDAQ:AAPL) stock has improved and thus suggests an options strategy designed to hedge against disappointment while capturing long-term exposure to the shares. He suggests going long on Apple Inc. (NASDAQ:AAPL) stock but buying a put spread collar by selling the Dec 130 call for 71 cents and buying the Dec 115/105 put spread for $2.36.

Shares of Apple Inc. (NASDAQ:AAPL) stock declined by as much as 0.11% to $117.34 during regular trading hours on Wednesday.

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