Apple Inc. Has a Lot to Prove Tomorrow

Expectations are high at Apple, but not necessarily about its trailing financials.

Jul 21, 2014 at 3:30PM

Everything seems to be pointing to a strong quarter out of Apple (NASDAQ:AAPL) tomorrow. After a sluggish 2013 that saw sales sputter and margins contract, Apple seems as if it's back to being Apple. A key supplier posted blowout quarterly results for the same three months late last week. Wall Street sees Apple posting modest 7% top-line growth, but with earnings per share growing at twice that rate.

Analysts are also starting to either upgrade the stock or boost their price targets to make sure that they're aligned with the bullish camp heading into tomorrow afternoon's report. The latest Wall Street pro to make a move was JMP Securities' Alex Gauna, slapping a $135 price target on Apple in raising his rating from Market Perform to Outperform.

It's important to note that analysts aren't necessarily jacking up their expectations for the quarter itself. Wall Street sees a profit of $1.23 a share, in line with the $1.22 a share that they've been targeting for several weeks and the $1.21 a share that they were holding out for three months ago.

No one's holding out for miraculous growth outside of Apple's iPhone stronghold. Given the weakness in iPad sales in Apple's most recent quarter and an IDC report suggesting that Apple was the only one of the five major PC makers in this country to post a year-over-year decline in shipments in this country during the past three months it will be up to the iPhone to once again save the day.

However, the market's already looking beyond what happened during the past three months. This should be -- barring a horrific setback -- the last quarterly report before the iPhone 6 hits the market. Whether we get two different sized models, the inevitable smart watch, or more product line refreshes or introduction, it will likely be an entirely different Apple in terms of catalysts and drivers when it offers up its fiscal fourth quarter numbers come late October. 

There's no point in trying to guess when Apple will actually update its iPhones or spill the beans on anything else that it may spring on the market ahead of the holiday season. Analysts know this, and that's why they're going to great lengths in recent days to turn publicly bullish or reiterate their optimistic views without necessarily boosting their expectations for the fiscal third quarter that ended in June. It would a shock to see Apple disappoint with its numbers tomorrow, but even if it did that would likely be a dinner bell for more Wall Street pros to get vocal about their support for Apple ahead of what should be some pretty exciting months in terms of product rollouts.

Everybody's loving Apple again even before it has a chance to have its own say on things tomorrow. The expectations are high about the future, and Apple better make sure that it paints in broad yet bullish strokes in talking about what tomorrow will bring come tomorrow itself.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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