Apple shifts focus from US to China

Asian markets’ gradually increasing importance over the US could see further changes to Apple’s mind set.

Apple store
Source: Bloomberg

After the market’s close on Tuesday 27 January, Apple is due to post first-quarter figures. The company’s adjusted earnings per share are called to rise to $2.597 from $1.42, while sales are due to improve up to $67.411 billion from $42.123 billion. The net effect of these two better figures is that the company’s pre-tax profits are expected to jump up to $20.742 billion from $11.472 billion.

With expectations so optimistic for the first quarter, it is no surprise that the institutional outlook for the company is so positive. Of the 62 firms covering Apple, 45 have buy recommendations, 13 have a hold and four have a sale rating. The average 12-month price target for the shares is $124.12, and following Friday’s close of $112.98 there is still a healthy 8.9% premium to be had from the company.

Apple has just announced that, for the first time in its history, iPhone sales in China will be greater than those in the US market. The shift is not by a small amount either, as China could account for up to 36% of total sales and the US may only account for 24%.   

There is still a lingering feeling that the company could be doing more with the cash that they have stockpiled, and there are concerns surrounding the security of its new payment system, but with the Asian market opening up it is difficult to imagine that the bullish sentiment will not remain. The 100-day moving average has offered support on a number of occasions and only a close below the current level of $107.26 would trigger a rethink on the stock.

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