Apple faces the low bar of expectations on the third quarter results

So far, Apple has had a strong 2019 year, with an increase of more than 45% in its stock since the company reached its lowest level after announcing a shortfall on January 2nd. The iPhone maker also continues to hit the currency and has announced that it will reserve at least $ 52 billion in revenue after the publication of the results after Tuesday's bell.

The most important figure that motivates the fluctuations of Apple's stock on earnings day is that of the forecasts – with the exception of once earlier this year, Apple almost always meets its expectations, and disappointing forecasts may harm actions. When Apple missed its forecast in January, he said demand in China was coming in well below expectations, which is linked to Trump's trade war.

Analysts believe that guidance expectations are "a low bar", leaving a surprising space for Apple.

"Especially with many buyer-side investors expecting growth in the smartphone market and iPhone shipments, we see a positive potential for investor expectations compared to the F4Q19 forecast," wrote Samik Chatterjee of JP Morgan, Monday.

Analysts say that leaves Apple with a lot of leeway, even though the company is experiencing two consecutive declines in its year-over-year business decline and significant strategic issues. , including a trade war between the United States and China in which Apple has become confused.

"Investor confidence remains negative despite the improvement of iPhone and Services data points, and the low expectations for the September quarter suggest a positive earnings configuration," wrote Morgan Stanley's Katy Huberty on July 22.

"The UBS Evidence Lab data corroborate the general malaise," UBS badyst Timothy Arcuri wrote Monday. "China's demand / tariffs and the growth of services are, as one might expect, the main problems of investors."

"We believe that AAPL is well positioned to continue to surprise investors upward, driven by the convergence of better organic trends (especially in services) and low expectations for the quarterly guide. September (people remain clearly underweight here), "wrote Amit Daryanani, an badyst at Evercore. July 24th.

Here is what badysts who follow the actions expect from a Refinitiv badyst survey:

• EPS: $ 2.10 per share versus $ 2.34 last year
• Returned$ 53.40 billion versus $ 53.26 billion last year

The product combination is one of the most sought after statistics by badysts. Historically, Apple's iPhone accounted for more than half of Apple's total business turnover, but it has declined in recent months, as sales slowed down and other ranges of Apple products, including the iPad, Apple Watch and Mac desktops, grow. Analysts expect revenue of $ 26 billion for the iPhone during the quarter, compared to just under $ 30 billion last year for the product.

Last quarter, only 53% of Apple's total business achieved with the iPhone rose to 58.01 billion dollars. This is due to growth in Apple's service operations, including App Store fees and online subscriptions, which accounted for 19% of Apple's revenue in the second quarter, a record for the company. Analysts will closely monitor the growth of the service sector. Huberty expects Apple to post a 20% higher service revenue than the previous year, but 15% for Street.

"The combination of the negative sentiment of investors, the potential for accelerating services in June and the very low bar of the September forecast keeps us in the profit," wrote Morgan Stanley badyst Huberty. in a note of July 22nd.

Many investors are hoping that an iPhone 5G will generate a big wave of upgrades. Apple does not talk about future products, but just bought Intel's $ 1 billion modem division, which includes a lot of intellectual property related to 5G and employees who know how to work on 5G technologies. This agreement will be concluded later this year, but investors will be attentive to the indications of 5G from the leaders of the company.

"We expect the discourse to move more towards launching new services in 2H and a 5G scenario for 2020," wrote Wamsi Mohan, an badyst at Bank of America Merrill Lynch, in a note on July 24.

Analysts also expect to interview Apple CEO Tim Cook about chief designer Jony Ive, a veteran of Apple who reported directly to Cook and headed the company's industrial design as well as the design of the interface. The announcement by the company of his departure in June did not affect much the stock, but he has been instrumental in many of Apple's most important products and, wrongly or wrongly Because of this, many outsiders viewed it as the driving force behind his product philosophy.

Apple may also have to deal with its relations with the Trump administration and its trade war with China.

Apple badembles its products in China, which is also the third largest market of the company after the Americas and Europe. Last week, President Trump said he would not give Apple a waiver for Mac Pro parts imported from China. He then stated that he "liked Cook" a lot and that he was expecting Apple to announce a plant in Texas. (Apple has not responded to a request regarding Trump's comments.)