Alex Cho

About the Author Alex Cho

Best tech/finance blogger on TipRanks. Alex Cho is ranked 7th among all financial bloggers, with a sector focus of technology stocks. The research he publishes captures the long-term growth potential of tech franchises, and market valuation. His research recommendations over the span of five-years has averaged into an annualized return of 19.3% across 392 ratings of which 66% were successful. Over his years of publishing, Alex Cho has been an indispensable source of information for an investment minded audience, which is why his lifetime viewership has exceeded ten million in total since 2012, across various media platforms. Furthermore, he’s frequently cited in various local business journals across the United States, and is frequently tagged with the “in-depth” designation on Google News for his public articles. The quality of his research is well known, and is well-respected which is why he’s frequently cited by other authors, journalists, bloggers and experts. Alex Cho was a former founding partner of Alexander & Cohen Capital Management, has worked as a consultant for mid-stage tech companies looking to raise capital or form an exit strategy, with the most recent consultation billed to a client that was generating revenue of $10 million+ in the web domain/registrar segment. Alex Cho is frequently invited to interview members of management at various Fortune 500 tech companies’ due to his outstanding media credentials, and credibility. Furthermore, he frequently attends various tech media events at the request of the event organizers. Alex Cho has a great relationship with Wall Street and Silicon Valley, as well. In the Venture Capital Space, he has sources that are inclusive of VC Partners, and independent research from PitchBook, Mercury Data, eMarketer, MergermarketGroup, and so forth. Anyone facing the public with investment related material needs quality sources, which should be inclusive of insights from Private Equity and various sell-side institutions and debt rating agencies as well (Standard & Poor’s, Fitch, & Moody’s). Alex Cho publishes with the support of Bank of America Merrill Lynch, Morgan Stanley Americas, Royal Bank of Canada Capital Markets, United Bank of Switzerland AG, Barclays Americas, Goldman Sachs, J.P. Morgan, Credit Suisse AG, PiperJaffray, Wedbush Securities, Oppenheimer & Co., Nomura Securities, BMO Capital Markets, Raymond James, Pacific Crest, SunTrust, Mizuho Securities, Deutsche Bank and Canaccord Genuity. Alex Cho attended ASU via the MAPP program with a 3.76 GPA in business-finance. The genius behind Cho has less to do with his academic accomplishments, but rather his ability to navigate, adapt, and improve the quality of his work through all the activities he has engaged. In the past year, Alex Cho has launched a new marketplace service referred to as Cho’s Investment Research. To learn more about this service, or to receive article notifications, be sure sure to subscribe. We provide frequent updates via our Blog Posts, which goes out to our subscribers.

Apple (AAPL) Stock Has a Lot to Prove Today


Apple (AAPL) is expected to report fiscal second-quarter earnings today, which could build-up some more constructive commentary relating to its sagging numbers in mainland China. Investors and analyst are hopeful of a turnaround in the company, and anything related to better than expected China results, more service revenue momentum, or perhaps an uptick in Apple Watch shipments would drive the stock forward.

Albeit, there are a couple caveats to Q1’19 figures that might surprise to the downside, such as inventory related challenges (though this might be less likely given the weak shipment figures from Q4’18 may have altered Apple’s iPhone build assumptions). Also, Apple did cut pricing in China, so there could be solid commentary relating to those pricing adjustments on the quarterly earnings call as well.

Currently, the consensus anticipates that Apple will report revenue and dil. EPS of $57.44 billion and dil. EPS of $2.36. Revenue is expected to decline by 6% whereas dil. EPS will decline by 10% according to estimates. The company is anticipated to report at the high-end of its outlook range, and absent of solid earnings results, the stock is highly susceptible to drop following the announcement, as expectations already embed a drop-off in unit shipments.

Expectations have shifted toward iPhone upgrades, as opposed to new customers, and this is unlikely to change when Apple discloses global installed base figures. The number of customers within the upgrade window that could convert into customers during Q2’19 could drive meaningful revenue contribution, hence not all hope is lost, as iPhone revenue could surprise on upgrades. Also, Apple is anticipated to announce an update to its capital return policy (dividends and share buybacks), and the recent settlement with Qualcomm will result in a cash charge, so EPS comps might look a little worse than anticipated.

Shareholders probably won’t care if Apple misses EPS estimates, because of the Qualcomm settlement, but worse than expected results tied to iPhone or Service revenues will definitely take the stock lower, hence all eyes are on Chinese results, which contributed to prior quarter’s earnings miss.

Ahead of the print, Daniel Ives of Wedbush Securities maintained his Outperform rating on Apple stock, with $225 price target:

We are expecting at least an in-line quarter and likely a beat on stronger iPhone revenues as China consumer demand rebounded. With ~900 million active iPhones worldwide and 350 million of those in a window of an upgrade opportunity over the next 12 to 18 months based on our analysis, we estimate between 60 million to 70 million of iPhones slated to be upgraded/new purchases are out of the key China region.

Ives is not alone in his optimism on China as other analysts anticipate a recovery in the region. However, while analysts are convinced of a recovery, institutional investors aren’t convinced by the recovery that’s broadly anticipated. Morgan Stanley’s Kathryn Huberty stated:

Conversations with institutional investors suggest that most are uninvolved or underweight/short despite the likelihood of Services growth re-accelerating, iPhone declines moderating, and continued share price support from the company buying back stock. Apple to announce a 10% dividend raise and at least a $50B increase to buyback authorization.

Bottom line

Given that expectations are so low, and with some going so far as to sell short the stock, and many others on the sideline, there’s a lot of room for investor sentiment to improve. Also, the on-going service revenue ramp will remain one of the bigger bright spots in the quarter, and any revenue acceleration in the services segment could boost the share price following the quarterly earnings announcement. Some good news on iPhone shipments could also get investors off the sidelines with share buybacks adding incremental upside, so the worst might be behind us.

TipRanks reviewed 26 analysts and the results are divided. 16 are bullish on Apple stock, 16 are sidelined, while only 2 are bearish. The consensus price target stands at $201.86, suggesting the stock is fairly valued.

 

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