Apple stock grinding higher ahead of earnings

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Sullivan/Getty

• Apple
  is set to report its third-quarter earnings after the closing
  bell Tuesday.
• Analyst expect the company to post earnings of $2.16 a
  share on revenue of $53.31 billion.
• Shares opened up roughly 0.4% Tuesday ahead of the
  earnings report.
• 
  Follow
  Apple’s stock price in real-time here. 
  

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Shares of Apple are rising, up about 0.4% in early trading
Tuesday, ahead of the
company’s third-quarter earnings report after the closing
bell.

Analysts polled by Bloomberg expect the tech giant to post
earnings of $2.16 per share on revenue of $53.31 billion. But at
least one analyst warns this quarter will take a back seat to
more important upcoming quarters.

“This quarter takes a back seat to the “main event” which is all
about the FY19 underlying iPhone demand picture and ramping
services business which remains a key incremental growth driver
for Cook & Co. for the coming years,” Daniel Ives, head of
technology research at GBH insights, said in a note to clients.
He has a $200 price target for Apple.

“We believe 350 million iPhones are in the “window of
opportunity” to upgrade over the next 12 to 18 months with Apple
needing to capture a majority of these units as part of this
upgrade cycle to make a clearly successful iPhone product cycle
in 2019 and lay the groundwork for future services/software
growth and steady iPhone demand over the coming years.”

Ives expects three new iPhones to be released in the next three
to six months, which should “capture the underlying
demand/upgrades among customers that have decided to bypass the
8/8+/X cycle this past time around, with price points and
features that catalyze fence sitting iPhone customers onto their
next smartphone.”

Apple Services — one of the company’s fastest-growing revenue
streams from things like the App Stores and Apple Music — could
fuel growth in the third quarter without headline-making iPhone
releases.

“We believe Apple’s strong software capabilities, expanding
services business and unique digital ecosystem at large
are increasingly being appreciated by the market,” analyst
Brian White of Monness, Crespi, Hardt & Co., said ahead of
the report.

“Despite this improved sentiment, we believe Apple remains one of
the most underappreciated stocks in the world with a valuation
that remains depressed.”

Apple is the last tech giant in the so-called FAANG basket of
mega-cap stocks to report earnings this quarter. So far, its
peers have largely disappointed the market, with Netflix and Facebook sinking after earnings reports that
missed Wall Street expectations.

Shares of Apple are up 10.6% this year.

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