Understanding Apple: Three Keys To Stock Price – 3. Looking Ahead

Apple  share price has been slammed recently, falling as low as $92.43 last Wednesday. The question for investors is whether this downward trend will continue, if the price will remain range bound as it has for over a year, or if share prices will reverse and continue to appreciate.

I have identified three key factors in the future value of Apple stock. The first article focused on iPhone sales which many see as leveling off in growth, or even declining in the current year. Since this product currently accounts for well over 60% of Apple’s income, this would clearly affect performance. Fears over this are what drove the price down.

The second post focused on how the Services and Other Products categories – particularly the new Apple Watch – will likely drive moderate growth.

In this post we will examine what may be the most important influence on Apple stock price:

  • Apple’s forward guidance for the March quarter

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Understanding Apple: Three Keys To Stock Price – 2. Dark Horses

Apple (AAPL) share price has been slammed recently, falling as low as $92.43 last Wednesday, almost matching the twelve month, intraday low of $92. In spite of the price rising back over $101 on Friday (January 22), the question for investors is whether this downward trend will continue, if the price will remain range bound as it has for over a year, or if share prices will reverse and continue to appreciate.

Obviously, the whole question revolves around growth. will Apple revenue stagnate or even see a decline in its revenue base – as some have suggested?

We have identified three key factors in the future value of Apple stock. The previous article focused on iPhone sales which many see as leveling off in growth, or even declining in the current year. Since this product currently accounts for well over 60% of Apple’s income, this would clearly affect performance.

The question is simple – if iPhone revenues level or decline, can anything else replace that growth?

This article looks at the second key to future stock price – what I call Apple’s Dark Horse elements, the categories Apple dubs in its financial reports:

  1. Services, and
  2. Other Products
  • Note: Most of this analysis will be qualitative. I am not trying to propose any specific numbers. What number I do use are meant to be general examples representative of a range.

Revenues for the categories are highlighted in details from last quarter and fiscal Q1 of 2015 in the images below.

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Understanding Apple: Three Keys To Stock Price – 1. Traditional Products

Apple (AAPL) share price has been slammed recently, the price falling as low as $92.43 on Wednesday, almost matching the twelve month, intraday low of $92. In spite of the price rising back over $100 on Friday (January 22) , the question for investors is whether this downward trend will continue, if the price will remain range bound as it has for over a year, or if share prices will reverse and continue to appreciate.

Obviously, the whole question revolves around growth. Can Apple continue to grow at an investor-pleasing rate? Or will it stagnate or even see a decline in its revenue base?

I have identified three key factors in the future value of Apple stock. This article looks at one key to future stock price – Apple’s traditional products, but particularly the iPhone.

The current rout has been caused by fears of dropping iPhone sales. As the iconic smartphone represents more than 60 percent of Apple’s revenue (63% last quarter, 69% calendar Q1 2015) falling sales would definitely curtail overall revenue growth.

  • NOTE: Most of this analysis will be qualitative. I am not trying to propose any specific numbers.

But first…

Before discussing the iPhone in more detail, let’s look at Apple’s other feature products.

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