Saturday, October 6, 2012

Apple Pre-Earnings Outlook 10-6-12

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It's hard to believe that it has been one year since Steve Jobs' death. Many have questioned if Apple could survive without him, the stock is up 79% in that period.

In less than 3 weeks Apple will report Q4 2012 earning, which closed last Saturday, Sept. 29 -- expectations are that they'll be even weaker than Q3 earnings.

As CEO Tim Cook explained to analysts last July, Q3's earnings were reduced by customers who put off buying an iPhone after reading press reports that Apple was working on a new model. Apple analysts -- anticipating that the iPhone 5, like the iPhone 4S, would be released in October -- lowered their earnings estimates for the September quarter. But Tim Cook surprised everyone by releasing the IPhone on Sept 21, or 9 days of sales that will fall into fiscal 2012.

In 2012 Q1 earnings estimates called for $10.21 per share, actual $13.87; Q2 $10.21 est actual $13.87; Q3 $10.39 est actual missed $ Q4 $8.89 est. Bring it to $44.38, ITZ estimate FY 2012 was for $50 and @ 15 times p/e a $750 year end price target. If earnings come in at current estimates we should have a $44.38 FY and at 15 times a $665 target, which is we're at currently.

Apple has stumbled near term with its maps roll out. Even the move to swap out Google Maps has Jobs' fingerprints all over it. Jobs was known as someone who had come to hate Google and Android. But new products continue to roll out, new iPad, iPhone 5, now iPad Mini & perhaps iTV? Jobs ideas and plans have definitely packed the pipeline for years to come.

One other financial note, most focus on earnings...but neglect the fact that Apple has $117 Billion in cash and investment assets, making it the largest hedge fund in the world, Braeburn Capital. LINK That's $125 in cash per share or 19% of its closing share price of $652.59 , which also yield 1.6%.

So is Apple a sell here or a buy? It just closed under it's 50 day moving average Friday. Analysts have been calling $650 a key psychological level. ITZ technical levels are $640, the April 10th high, after that the 100 day moving average around $617. That places Apple at the 61.8% Fibonacci Retracement from the July low $567 - Sept. high $706.

One has to look forward and Q1 2013 should be a very strong quarter as holiday sales kick in. ITZ suggests using any pullback here to either buy and or add to positions. ITZ is revising the earnings outlook for 2012 from $50 to $45 per share & $57 for 2013 with a price target of $850. Previous ITZ Post

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