Apple Trading Higher After Blowout Quarter

Dow component Apple Inc. (AAPL) is trading higher by nearly 3% in Thursday’s pre-market after beating Q2 2021 top and bottom line estimates by wide margins, posting a profit of $1.40 per-share on $89.58 billion in revenue. The tech icon beats expectations across all product categories, led by iPhone sales of $47.9 billion, which fueled an overall 53.6% year-over-year   revenue increase. Guidance for double digit year-over-year Q3 growth and a 7% dividend increase capped off the highly bullish presentation.

Strong Sales Across the Board

Installed base upgrades to 5G iPhone 12 models added considerable revenue during the quarter while iPad posted the strongest March sales ever.  Even Mac got into the act, wrapping up the best three quarters in the company’s history. Sales grew by double digit percentages in all geographical regions, highlighting the impact of massive U.S. stimulus and a slow worldwide recovery from the COVID-19 pandemic.

Goldman Sachs analyst Rod Hall cried “Uncle” after the report, upgrading Apple from ‘Sell’ to ‘Neutral’, noting “We are upgrading our rating after Apple posted another large beat and implied a raise vs. our June revenue expectations. Our original view that the iPhone cycle would disappoint in the midst of COVID was clearly wrong. Not only has Apple done better than we expected on iPhone during the cycle but Mac and iPad have also materially outperformed our forecasts”.

Wall Street and Technical Outlook

Wall Street consensus currently stands at an ‘Overweight’ rating based upon 24 ‘Buy’, 4 ‘Overweight’, 10 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. The blowout quarter should lift ratings and targets in coming sessions but it might not be enough to trigger a new trend advance. Price targets currently range from a low of $83 to a Street-high $185 while the stock is set to open Thursday’s session about $23 below the median $160 target.

Apple returned to February 2020 resistance in the low 80s in May and broke out, entering a strong uptrend that stalled at 138 on Sept 2, just two days after the 4-for-1 split. A swift decline to 103 got bought aggressively but a January breakout failed after just four sessions, reinforcing resistance between 138 and 145. Price action is now pushing against the lower edge of this zone but adverse cycles predict the trading range will be hard to break in the short term.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.