Stock Analysis & Ideas

The Apple Report: Tech-Gadget Giant “Phones It In”

Story Highlights

Apple surprised Wall Street by showing it’s still the “Mac daddy” of PC purveyors. However, AAPL stock hardly moved as financial traders focused on a slight uptick in third-quarter iPhone sales.

It’s funny how options sellers always seem to win in the end. They bet that stocks won’t move much and collect hefty premium payments when they’re right – and as Apple (NASDAQ:AAPL) demonstrated unimpressive iPhone sales growth in 2022’s third quarter, stock traders hesitated while option sellers laughed all the way to the bank.

As usual, overenthusiastic message-board gurus expected Apple stock to move up or down 10%, 20%, or even more after post-earnings. In reality, Apple shares declined less than a full percentage point in after-hours trading, leaving both bulls and bears disappointed.

Perhaps this isn’t such terrible news, though, during a time of high inflation, supply-chain disruptions, and overarching anxiety in the financial markets. If no news is good news, then Apple actually made the grade despite short-term traders’ lofty expectations.

iPhone Sales were Adequate, but Mac was on Track

It might be an exaggeration to say that Apple “phoned it in” with lackluster Q3 2022 iPhone sales totaling $42.63 billion. After all, this result represents a decent improvement over the $38.87 billion recorded in the year-earlier quarter.

However, in today’s day and age, a decent result from a giant like Apple isn’t good enough for a weary, anxious Wall Street. Everybody knows that the iPhone is the product that made Apple famous – or at least, that’s what people under the age of 30 probably think.

If you’re old enough, you might remember that Apple first made its bones on an ancient PC called the Macintosh. This business segment is now simply called “Mac,” and it’s not nearly as crucial to Apple’s top and bottom lines as the iPhone is.

Still, it’s fairly impressive that Apple managed to grow its Mac sales from $9.18 billion in 2021’s third quarter to $11.51 billion in Q3 of 2022. Notably, the company managed to achieve this during a time when PC sales are supposedly slowing.

What is a Good Buy Price for AAPL Stock?

AAPL has a Strong Buy consensus rating based on 23 Buys, four Holds, and zero Sells assigned in the past three months. The average AAPL stock price target of $183.37 implies 26.48% upside potential.

Takeaway: Apple’s Overall Results were Fine but Not Mind-Blowing

So far, we’ve painted a bad-news, good-news picture for Apple’s quarterly results. When we examine the top and bottom-line growth in Apple’s third-quarter report, this decent-but-not-outstanding theme seems to persist.

Here’s the need-to-know data from the report. Apple’s Q3 2022 revenue increased 8% year-over-year to $90.1 billion, representing a moderate beat of the analyst consensus estimate of $88.8 billion. Meanwhile, Apple’s net earnings per share of $1.29 slightly outpaced Wall Street’s expectation of $1.27.

Really, then, the trading community’s ho-hum response makes perfect sense. It’s possible that AAPL stock will make a much bigger move to the upside or downside at some point, but for the time being, it looks like thrill-seeking investors might have to wait until Apple’s next earth-shaking event.

Disclosure

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