Apple shares up on Q3 results: should you buy?

on Jul 28, 2022
  • Apple reports market-beating results for its fiscal third quarter.
  • Dan Nathans makes a bull case for Apple shares on CNBC.
  • Shares of the iPhone maker are up 3.0% in extended trading.

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Apple Inc (NASDAQ: AAPL) reported market-beating results for its fiscal third quarter on Thursday. Shares are up 3.0% in after-hours trading.

Apple shares break above their 200-day MA

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Unlike a list of mega cap tech names, Apple signalled that it does “not” plan on slowing the pace of hiring. On CNBC’s “Fast Money”, Dan Nathans – Founder of RiskReversal Advisors turned to “technicals” to make a bull case for Apple shares.

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It’s trading at $163 a share in the aftermarket, which is up about 25% from June lows. It is above its 200-day moving average. You will not find another mega cap tech name anywhere near its 200-day moving average.

Apple blamed supply constraints for a hit to Mac revenue this quarter, but expects such pressures to somewhat ease in Q4. On top of that, the macro environment, it added, has failed to make a notable dent in the iPhone demand so far. Nathans said:

Apple is bucking that trend right now. They’re great operators in this difficult environment. There’s really nothing to knock at this one here.

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The multinational spent more than $28 billion on dividend payments and share repurchase in Q3. Wall Street has a consensus “overweight” rating on Apple shares with upside to $181 on average.

Key takeaways from Apple Q3 results

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  • Earned $1.20 a share versus the year-ago of $1.30 a share
  • Revenue went up 2.0% on a year-over-year basis to $83 billion
  • iPhone revenue jumped 3.0% ($40.67 billion) to beat estimates
  • Services revenue gained 12% ($19.60 billion) but fell shy of expectations
  • Mac revenue tanked 10% to $7.38 billion versus $8.70 billion expected
  • iPad revenue was also down 2.0% but still ahead of experts’ forecast
  • Revenue from China dropped only 1.0% despite the COVID restrictions

“Other Products” brought in $8.08 billion (down 8.0%), missing the consensus by $780 million. Gross margin improved from 42.61% to 43.26%, as per the earnings press release. “Foreign exchange” was a significant headwind for Apple in Q3.

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