Apple Stock News: Higher Than Expected iPhone 7 Demand May Boost Sales Growth For Q4 Earnings Report

Apple Stock News

For the latest Apple Stock News, AAPL closed at $113.95 on Wednesday, September 28th, 2016, with a 0.76% gain, or $0.86 from its previous close of $113.09 per share.

Shares have been up this past week, as the market has recognized higher than anticipated demand for the iPhone 7, as shown from new data reports recently release. For example, Bank of America had released reports indicating that demand is strong for iPhone upgrades, which could lead to 34 million sales in the U.S. alone. If the high demand can translate into high sales, then Apple Inc. investors will be very happy. Since, over the past two-quarters sales have been down year-over-year, many hope that the iPhone 7 will be able to help shore up sales growth.

Apple Stock News

Furthermore, iPhone 7 orders are still backed up as a result of constrained supplies over the past couple of weeks. Investors are uncertain if this is a result of real supply problems or higher than expected demand. Most do believe demand is higher than expected, along with the fact that historically Apple Inc. has had order constraints with the release of newer iPhone edition, such as with the iPhone 6s. Investors should as well consider that the iPhone 7 initial launch was in 29 different markets, and then 29 more by September 23rd, which is more than double that of the iPhone 6s launch. Additionally, U.S. telecom giants Sprint and T-Mobile stated that iPhone 7 pre-orders were 5 times larger than the iPhone 6s launch. Both these findings should act as catalysts for iPhone sales, through high demand and far reach by Apple Inc. On an industry level, Samsung, one of Apple’s largest competitors in the smartphone sector, has had major problems recently, as lawsuits and recalls for the S7 are taking a toll on sales and consumer brand loyalty.

Although investors are hopeful for high earnings and sales growth, Apple is not very optimistic about its revenue forecast. It has just released its Fourth quarter earnings guidance, of which it will report Q4 earnings on October 27th, 2016. The company does not believe that the iPhone 7 sales will make a dramatic impact over the last few weeks of the quarter, enough to boost earnings. However, iPhone sales make up about 65% of revenues, as described by Q2 of 2016, therefore; if Apple is be able to improve its supply operations the firm can still show higher than expected revenues for Q4, causing a positive earnings surprise. Additionally, the company is trading at a low P/E, at about 13, compared to the industry (technology) average of about 25. Therefore, there can be much upside and higher premiums for investors looking past Q4, especially if revenues top expectations.

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