American multinational technology giant Apple Inc. (Ticker Symbol: AAPLWealth Strength IndexAAPL is Extremely Up and trending Up) reported earnings and revenue after the close yesterday that were better than the street was expecting. Apple reported an earnings per share beat of $3.03 vs. Wall Street analysts’ expectations of $2.84 per share. Additionally, the company reported a revenue beat of $64 billion vs. Wall Street analysts’ expectations of $62.99 billion. The Cupertino, Calif.-based company reported iPhone revenues of $33.36 billion vs. the $32.42 billion that Wall Streets analysts’ were expecting. Apple’s service revenue also came in better than expected at $12.51 billion vs. $12.15 billion that analysts were expecting.
iPhone sales were down 9% year-over-year, which was an improvement from previous quarters that saw an iPhone revenue decrease as high as 15%. Apple saw solid growth out of its services business, which grew this quarter by 18%. The company also saw strength in its subscription business, which grew 40% year-over-year and currently has more than 450 million paid subscribers. Apple’s wearables unit, which includes the popular AirPods, reported revenues of $6.52 billion which was up a whopping 54% for the quarter.
The above image is a longer-term daily chart of Apple’s stock over roughly the past five years. The stock started out in 2015 trading positively and slowly trending low over the course of the next year-and-a-half. The stock traded in a wedge consolidation pattern, which it finally broke out in the second quarter of 2016 led by a strong earnings report. Apple continued to move higher finding dynamic price support multiple times at its 100- and 200-day moving averages throughout the next eighteen months. Apple proceeded to rally over 100% before finding some price resistance around the $230.00 price level. Apple put in a top shortly after that while forming a bearish divergence pattern where the stock makes a higher high in price but the Relative Strength Index makes a lower high (as indicated by the yellow lines on the chart).
Apple then retracted back over the next six months, pulling back nearly 40% to just under the $150.00 price level. Apple shares took off to a great start at the beginning of 2019, rallied off of its 2018 lows and proceeded to move higher. Late in the first quarter of 2019, Apple broke above its downtrend from the previous year and found some price support at its 100-day moving average right around the $175.00 price level. The stock continued to rally trading to an all-time high of $249.75 on October 29th, 2019. Currently, the stock is trading positive for the year and is trading just under 1% away from its all-time high.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 34 analysts offering 12-month price targets, the average price target for Apple’s stock is $243.77. According to that number, the stock is priced at a slight premium relative to Wall Street’s analysts and could be considered overvalued around current levels near $247.31.
Investors in Apple should look for a U.S. and China trade deal to begin to take shape or look to their next earnings release on January 29th for fresh news within the company.