Apple Needs $60+ Billion Revenue Guide To Move Higher

The key number investors typically look for in Apple’s financial results press release is next quarter’s revenue guidance. The June quarter results probably won’t get the shares to move much unless there is a meaningful miss or outperformance. It will probably take better than expected revenue guidance for the stock to move meaningfully higher off of the earnings release. It has played a key role in the past two years stock move.

September quarter expectations

For this year’s September quarter, the average sell-side analyst is expecting revenue of $59.6 billion (with a range of $55.9 to $63.1 billion), which would be an increase of 13% year over year (and the fifth quarter in a row of double-digit revenue gains). This is the first quarter with a comparison to a double-digit revenue gain in two years, so this is a bit more meaningful since it is against a tougher comparison.

From the analyst notes I have seen, expectations are muted for revenue guidance  A big swing factor will be how many and especially when new iPhones will become available. With chatter that a new LCD iPhone may not be out until October, if revenue guidance comes in with a mid-point starting with a $6, meaning $60 billion or more, the stock could move higher.

Above Avalon’s chart is a pretty good illustration of how investors will view the revenue guidance. Note that the chart has a range of revenue expectations from $58 to $62 billion. There is a slice in between due to showing an “Above Avalon Estimate” range. Strong results start at $61 billion.

Compared to the last two years June quarter announcements

In 2016, investors were expecting September quarter revenue guidance of $45.8 billion and Apple gave $45.5 to $47.5 billion. With the mid-point at $46.5 billion and the company’s history of typically beating the mid-point, there was a sigh of relief and the stock gapped higher from $93 to almost $100 and started a two-year run that has taken it to its recent high.

Going into the announcement its RSI, or Relative Strength Index, was slightly below 50, but in a relatively neutral position. Keep in mind there had been a lot of negative chatter around the stock for the previous six-plus months which had caused it to languish.

Going into the June 2017 results, the stock had bounced around $140 and $155 for three months and its RSI was almost exactly 50. Guidance for the September quarter helped the shares to gap higher again.

Analysts were expecting revenue guidance of $49.2 billion and it came in at $49 to $52 billion. With the mid-point at $50.5 billion, the stock jumped above $160 before pulling back to the low $150’s.

The previous two June quarters help to illustrate how Apple’s stock could move if the company’s September quarter revenue guidance is above expectations. Especially since this year, the share’s RSI is also right at 50.