Apple Q2 figures set for unlikely boost

Will Samsung woes equate to increased success for Apple?

Apple store
Source: Bloomberg

Second-quarter earnings per share are expected to improve marginally from the first quarter, up from 1.441 to 1.453, though at the same time pre-tax profits in Q1 are expected to drop from $12.905 billion to $12.285 billion. Apple sales are also expected to have dropped a little over the last quarter, from $43.6 billion to $43.5 billion.

As an indication of market sentiment the short interest ratio is 2.46, and of the 52 brokers rating the stock with Reuters 18 are strong buys; 22 buys and 11 holds.

The last couple of years have seen Apple and Samsung battle it out to be crowned the biggest smart phone provider and the title is currently held by Samsung. In the last week we have seen Samsung report sliding sales, dented by a combination of increased competition from China and also the strength of the South Korean won. The increased competition at the cheaper end of the smart phone product range will also affect Apple; but not to the same extent as Samsung, as primarily Apple target the mid-range to top end of the market while Samsung also cover the lower end. In contrast to the South Korean won, the US dollar is currently at the lower end of the range that it has held for the last two-and-a-half years, though this has not had a material impact on the company’s figures.

Following the company’s 7 for 1 stock split at the beginning of June the shares have continued to climb and are now arguably a little too far away from the 200-day moving average. A solid set of figures along with a negative outlook for its biggest rival Samsung should see the stock well supported, but being overbought would be more attractive with a small correction back down to the $94 level.

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