Apple is set to report its revenue results around April 30 and Morgan Stanley and Goldman Sachs analysts are in disagreement over Apple Services revenue. Morgan Stanley’s Katy Huberty is optimistic about Apple’s report while GS analyst Rod Hall is expecting a disappointment.
Huberty increased her above consensus Services Revenue estimate by 2.9% to $65.7 billion from $63.8billion. The move comes as a result of “accelerating Google TAC related revenue” that flows through under the Licensing & Other segment.
“…a linear regression analysis of our historical estimated Licensing & Other revenue with Google’s reported traffic acquisition costs (TAC) shows a very strong 0.94 correlation (0.88 R^2), suggesting that the search traffic related payments Apple receives from Google are a dominant driver of Licensing & Other revenue and the best way to forecast this revenue stream,” Huberty said.
On the other hand, Rod Hall reiterated his “Sell” rating on Apple’s stock as he expects a drop in App Store revenue to “$19bn in CY22 which we believe consensus has not accounted for and which could lead to downside risk for consensus Services estimates”.
Hall estimated $64.8 million in revenue for CY21 Services, slightly below Huberty’s prediction of $65.7 billion.Technical analysis: Breakout takes place
Apple stock price broke above the 50-day SMA yesterday as tech stocks moved higher to catch up with the rest of the market. As a result, Apple share price is trading above the $130 mark for the first time since mid-February.Apple stock daily chart (TradingView)
The price action also broke out of the symmetrical triangle to pave the way for a quick trip to $130. Traders buying Apple stock will now look to for a return to the area that hosts the all-time high near $145. A major support line is located at $127.00 in case a pullback takes place.Summary
Morgan Stanley and Goldman Sach analysts are in a disagreement over Apple Services Revenue ahead of the tech giant’s earnings report at the end of April. In the meantime, Apple stock hit a 7-week high as buyers aim to push towards new record highs.