The pull-back last Friday, July 16, due
to market volatility, provided another opportunity to enter an Apple options
trade again – and as long as the market decides to move back into the green
this week – the catalysts from last week still apply; and now, several more are
of the Original Recommendation HERE.....
since that report there has been several new developments to bolster the
recommended trade – and since the pullback on Friday a new Apple weekly options
trade has become a very viable proposition.
1. Apple Pay Later - Apple
is working on a new service that will let consumers pay for any Apple Pay
purchase in instalments over time, rivaling the “buy now, pay later” offerings
popularized by services from Affirm Holdings Inc. and PayPal Holdings Inc.
service, known internally as Apple Pay Later, will use Goldman Sachs Group Inc.
as the lender for the loans needed for the installment offerings.
The buy now,
pay later system could help drive Apple Pay adoption and convince more users to
use their iPhone to pay for items instead of standard credit cards.
2. Apple has
boosted the production rate of its iPhones, instructing manufacturers to build
90 million iPhones this year, a 20% increase on the 75 million units it
produced last year.
Suisse expects iPhone sales of 234 million units this year, 237 million units
in 2022 and 249 million units in 2023. Though Apple no longer reports iPhone
unit sales, it declared $47.94 billion in iPhone revenue in its fiscal Q2
earnings, up 65.5% year over year.
optimism in all things Apple is not surprising to J.P. Morgan’s Samik
Chatterjee. The analyst recently told investors Apple is well set up to
outperform in 2H21. In fact, the growing confidence means Chatterjee has added
Apple to the firm’s Analyst Focus List as “a Growth idea.”
“The recent momentum led by better
market share, drives us to also estimate higher sustainable volumes in future
quarters, leading us to see a path to Apple outperforming investor expectations
over a longer time horizon rather than just the upcoming earnings print,” the analyst said, confirming Apple
is also a Top Pick.
the increase in build rates, Chatterjee has “modestly” increased iPhone volume
expectations, but of more importance to the analyst is the “path to upside” for
the shares in the medium-term.
To this end,
Chatterjee rates Apple shares an Overweight (i.e. Buy), while slightly lifting
the price target from $170 to $175. The revised figure implying shares will add
19.5% from current levels.
3. Apple stock has heavy exposure to
- iShares Dow
Jones US Technology ETF IYW – APPL takes the second spot with 17.72% weight.
Sector SPDR Technology ETF XLK – APPL holds the top spot with 21.13% weight.
Information Technology ETF VGT – APPL occupies the first location with 20.13%
4. Momentum is expected to continue in the
Services segment driven by App Store, Cloud Services, Music, advertising and
AppleCare. The company recently launched Apple Podcast Subscriptions for
listeners in more than 170 countries.
endeavors to open up its ecosystem through partnerships with the likes of
Samsung and Amazon are positives for its Services segment. The
subscription-based Apple TV+, Apple News and Apple Arcade services are expected
to benefit from the company’s strong installed base. Markedly, Apple currently
has more than 660 million paid subscribers across its Services portfolio.
Development - Apple’s
focus on user privacy, as reflected by its latest iOS 15, iPadOS 15, macOS
Monterey, and watchOS 8 updates (all to be launched later this year), is a game
Earnings - Apple
stock has an impressive record of positive earnings surprises, as it hasn't
missed earnings consensus estimate in any of the last four quarters despite
market volatility. In its last earnings report on April 28, 2021, Apple
reported EPS of $1.4 versus consensus estimate of $1 while it beat the
consensus revenue estimate by 15.41%.
current fiscal year, Apple is expected to post earnings of $5.19 per share on
$356.51 billion in revenues. This represents a 58.23% change in EPS on a 29.87%
change in revenues. For the next fiscal year, the company is expected to earn
$5.36 per share on $372.87 billion in revenues. This represents a
year-over-year change of 3.29% and 4.59%, respectively.
revised their earnings estimate upwards in the last 60 days for fiscal 2021.
The Consensus Estimate has increased $0.09 to $5.19 per share. AAPL boasts an
average earnings surprise of 23%.
7. Other Analysts Positivity
- Loup Ventures’ co-founder and managing partner Gene Munster is of the opinion
that Apple’s stock will rally higher in the coming months over-coming market
volatility. He stated that “ultimately
that I think the best days are still ahead of the company, whether it’s 5G,
augmented reality, what they’re going to do in health care and transportation
and other additional services.”
recorded by Apple in various aspects of its business could see its stock price
reach $200 by the end of 2021, Munster added. He is predicting a 40% increase
in the stock price over the coming months.
Jim Suva, a
senior tech analyst at Citigroup, expects the company to experience an increase
in revenue and sales. As such, the expected increase in Apple’s stock price
will come from the increase in revenue and sales over the coming months.
As well, Morgan
Stanley's Kathy Huberty, on Thursday, lifted Apple’s price target by $4 to $166
per share, citing stronger demand forecasts and improving supply-chain dynamics
heading into Apple's iPhone 13 launch in the fall.
"While share price performance
post earnings may be more muted given Apple's recent outperformance, we are
buyers heading into the iPhone 13 launch in September," Huberty said in a client note. "We see the combination of mature
replacement cycles, increasing 5G adoption, improving retail store traffic,
longer battery life and camera quality, and share gains against Huawei as
drivers of iPhone outperformance relative to past cycles."
June quarter revenues for Apple pegged at $74.7 billion, around 2% ahead of
consensus, and September quarter earnings at $83.2 billion.
are up nearly 12.4% year to date, with most of that surge coming the past few
weeks. Incredibly, since June 1, Apple shares have rocketed 18%.