Elazar was launched in 2004 by Chaim Siegel and has served famous hedge fund clientele who demand a keen understanding of drivers of individual companies and financial markets. Chaim twice worked for renowned trader Steve Cohen of then-SAC Capital (now Point72). He was also a partner at JLF Asset Management which was funded by George Soros. Previously he was one of seven analysts on a $13B mutual fund at Morgan Stanley Asset Management. Elazar Advisors publishes its research into the Reuters/Refinitiv Institutional Platform and Factset where Elazar's earnings estimates are factored into the Street earnings numbers.  Elazar's research is used regularly by fundamental and algorithmic traders and investors at some of the largest mutual fund and hedge fund managers in the world. Chaim has been a 5-Star top ranked analyst in Tesla and other big cap tech companies. Try us with a  free trial here . All investments have many risks and can lose principal in the short and l

Apple Earnings Preview: What Can Drive The Stock

AAPL stock logo
Apple reports earnings tonight. There has been obvious bearishness from Wall Street analysts weighing the stock down. Any good news will get this stock to jump. There are a few items that need watching which can affect the risk/reward.

Stock Way Down And Bearishness

Most analysts have come out calling for iPhone X weakness. So the short side is probably very crowded. Short interest is near its highs.

We were among the first to point out potential weakness in the iPhone X back in December.

So if you're bearish you are certainly not alone and the risk/reward's not on your side.

We prefer to look for the bull call when all the sell-side is out negative.

169 Key Level

The stock is currently below a key level. We drew a support/resistance line that marked important action for Apple stock.

We are currently below that point which doesn't make the set up bullish.

A break above that line and a close above that line is bullish that can drive follow through.

What Could Get Apple Stock Higher?

There are two catalysts that can get this stock to pop.

1. A Monster Buyback

Apple said they want to bring their huge cash position to zero.

We include a giant buyback in our earnings model reducing the share count by 100 million shares a quarter. That would be a jump from last quarter's share count drop of about 26 million. We run that 100 million share count drop through our model for several quarters to come.

That would cut about 1/3 of their cash position by year end.

Even with our reduced share count our earnings are still below the Street. So we don't think that's a driver.

We also don't expect them to use all the money for share buybacks. They plan to use some of the money for M&A, dividends, and bringing some of their component needs in-house to build rather than buy. That could show up in a jump in R&D expense that we expect this quarter. That actually holds back our EPS numbers.

So the buyback potential is still huge but not enough for us to have higher EPS numbers than the Street.

What else can get the stock to pop?

2. iPhone Smaller In The March Quarter As A Percent

iPhone seasonally is a smaller percent of the business in the March quarter than the December quarter. Calls for iPhone weakness could have reduced impact on numbers.

Anyway you look at it though iPhone is their largest product in every quarter. Weakness will affect the overall company.

They also said last quarter, "We typically reduced channel inventories for our newest iPhones in Q2."

That's this quarter. We'd expect them to want to continue that next quarter as they clear the channel to make room for a clean launch of their Fall iPhone models.

Also we've heard that while Watch might be selling very well customers have a high return rate.

So even though you have a lower percent of the business coming from iPhone this quarter and strength elsewhere we don't think it's enough to offset the weak iPhone numbers.

It's All About the September Quarter

We'd guess the September quarter can be the opportunity so we're early. As they build a cheaper version of iPhone X and flow it into the channel that can get the revenues and the stock going again. For now it's early.


We want to be bullish with the stock down and Street bearishness, but our EPS numbers below the Street keep us on the sidelines.  For our Buys we need 45% 12 month upside. We currently have Apple at about fair value. We'll see how they report tonight.


All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. Model portfolio trades and positions are hypothetical to be used for directional analysis and ratings purposes. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues.

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