Fundamental headwinds due to the government shutdown along with technical weakness, a break of risin...
Everybody is waiting on Apple's earnings after the close today
10/25/2012 1:35 pm EST
Right now it feels like much of the market is holding its breath.
The stock fell to a new two-month low of $608.38 at noon New York time. It was up slightly from there to $609.97 as of 1:15 p.m. The noon low marks a 13.3% drop from the stock’s high of $702.10 on September 19.
The Wall Street consensus projects that Apple earned $8.85 a share for the September quarter. I think that’s likely safe and it isn’t where the market’s anxiety is focused anyway.
For the December quarter, Wall Street is currently looking for earnings of $15.67 a share. That is a huge jump from earnings for the September period, but the December quarter is Apple’s Big Bang for the year and the projected $15.67 represents just 13% growth in earnings from the fourth quarter of 2011.
Still Apple could cut guidance for the fourth quarter or for fiscal 2013. (The company can’t cut guidance for fiscal 2012 since its fiscal year ended with the September quarter.) And with so many companies doing that during this earnings season and with Apple’s revenue now so lumpy with big swings depending on the timing of product releases, Wall Street won’t be able to exhale until the conference call is over.
Even though the stock is down so strongly going into earnings, it could drop further on disappointing guidance. But I think the drop wouldn’t be long-lived. There are a lot of Apple bulls on the sidelines with target prices of $660 to $800 who would see the drop—and the end to the uncertainty that today’s earnings announcement has introduced—as a buying opportunity.
At least that’s how I read the market as we head into the end of day announcement.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did own shares of Apple as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/
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