Apple stock's bearish signs are rising
Investors looking for hard numbers to support a bullish case on Apple (AAPL) shares are swimming against a rising tide of data pointing in the opposite direction.
The most recent analysis and stock trading related to Apple is uniformly and decidedly bearish.
The latest came Tuesday, when the brokerage unit of Citigroup trimmed its earnings estimates for the second half of Apple's fiscal year ending in September.
Citi blamed knock-on effects from the United Kingdom's decision to leave the EU, something we flagged here almost two weeks ago.
Strong dollar likely to cost sales at Apple, Alphabet after Brexit
Yet Brexit is merely the latest Apple worry on Wall Street, where Citigroup is far from alone.
Average earnings estimates that were first slashed on the company three months ago were trimmed again in June — for Apple's current quarter, current fiscal year and next year as well.
During the past 30 days, for example, analysts who cover the stock took another 3 cents a share off their estimates for the quarter and fiscal year ending in September, on average.
Apple is seen earning $1.63 a share in the current period (fiscal Q4) and $8.25 for the full fiscal year, both well below year-ago numbers.
Apple bulls argue that these near-term expectations, like those for the fiscal third quarter, which the company is expected to report on July 26, are already baked into its stock price.
Yet last month, Wall Street also knocked down its collective profit view on Apple by 8 cents a share for the fiscal year ending in 2017.
While that sounds small, the cumulative effect of all these cuts since Apple's last earnings call in April has been to effectively kill the medium-term growth case for its shares.
By September 2017, Apple is expected to be a company with lower annual sales and smaller annual profit than it posted in fiscal 2015.
During these two fiscal years, Apple sales are seen dropping to $226 billion from $234 billion, while earnings per share are seen falling to $9.03 from $9.22.
If you believe year-over-year growth in annual profit drives stock prices higher, while annual declines cause stocks to fall, the two-year estimate trend does not favor Apple.
It also rebuts the argument that this fiscal year's sharp drop in sales and profit is a mere blip that will be reversed by the coming iPhone 7.
Not according to the most recent trading action in Apple suppliers.
On Tuesday, shares of at least four chip companies that sell components to Apple sold off on iPhone 7 concerns.
Cirrus Logic (CRUS) and Skyworks (SWKS) both fell 6% on heavier-than-usual volume, after they were downgraded by Pacific Crest Securities, while Qualcomm (QCOM) and Texas Instruments (TXN) both fell about 2%.
As if pessimism on both Apple and its suppliers wasn't enough, a technical analysis of its stock price is also of little comfort.
In mid-June, the 50-day moving average price of Apple shares dropped below their 100-day moving average.
When that happened last July, Apple shares fell 25% during the next six months.
Indeed, a look at an Apple chart shows that it's much closer to testing its 52-week low, just below $90, than climbing back to its 52-week high around $133.
To be sure, as reported here before, Apple's dividend should make it a core holding for tech income investors.
The tech stocks whose dividend yields top sales growth
But unless Apple reports better-than-expected results or issues a better-than-expected forecast later this month, it's hard to find any numbers that would make an investor seeking growth or momentum buy its shares.
John Shinal has covered tech and financial markets for more than 15 years at Bloomberg, BusinessWeek,The San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.