Apple stock is ‘poor’ risk-reward heading into the Q3 report: Krinsky

on Jul 22, 2022
  • BTIG's Jonathan Krinsky explains why he's dovish on AAPL.
  • Apple stock is currently trading near its strong resistance.
  • The iPhone maker is set to report its Q3 results on July 28th.

Apple Inc (NASDAQ: AAPL) is up roughly 20% from its recent low heading into the Q3 financial report. Still, the Chief Market Technician at BTIG says risk-reward is quite “poor” here.

Jonathan Krinsky is dovish on Apple stock

Broadly speaking, Apple looks like a good pick for a looming recession considering its fortress of a balance sheet. But from an “absolute price” perspective, Jonathan Krinsky said on CNBC’s “Halftime Report”, the stock is not all that attractive.

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Apple has had a 20% rally off the lows, almost identical to the move we saw in late March, right ahead of its last earnings print. So, the run-up into the earnings print always makes you a bit cautious.

The iPhone maker is scheduled to report its financial results for the third quarter on July 28th. Apple stock currently trades at a trailing 12-month PE multiple of 25.

Apple is trading near a strong resistance

Krinsky is dovish on the S&P 500 at large and expects the benchmark index to make a new low somewhere in August. For Apple, in specific, a strong resistance just above its current stock price puts him off.

Apple also has the 200-day moving average overhead around $158. And we’re seeing some upside exhaustion as well; metrics we focus on, similar readings that we’ve seen Apple stall in the past. So, I do think the risk-reward is poor here.

Apple is expected to report $1.16 of per-share earnings on $82 billion in revenue this quarter. The juggernaut has already warned of an up to $8.0 billion hit due to the resurgence of COVID-19 in China and supply constraints at large.

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