Apple stock set to hold gains after iPhone 7 launch
Apple’s upcoming product launch has sent fan boy/girl/analyst speculation into customary overdrive.
Apple’s upcoming product launch has sent fan boy/girl/analyst speculation into customary overdrive.
The playbook for these early-autumn events is now well established though. So much so that by the time the date is imminent, rumours—helped by well-placed leaks—are so detailed and nuanced there hardly seems any point of a ‘big reveal’ at all.
This is a problem for Apple, because it looks like these tactics are reaping diminishing returns of enthusiasm: investors are less and less impressed and consumers are getting bored.
On the date last September when the group’s flagship product, the iPhone, was updated, shares slipped 2%. That was well before the group confirmed its first ever iPhone sales decline a couple of months later.
This time around, jaded talk combines with the realization that it’s unlikely to be an iPhone ‘leap year’—when updates bring ‘next level’ advances.
All this has left a broad suspicion that tomorrow’s launch could be pretty much a non-event; in line with iPhone sales growth forecasts of only 2% at most between 2015 and 2020.
Our view is that whilst the razzmatazz quotient on Wednesday night might be relatively low, it would be a mistake to write the event off entirely.
The date of one of its biggest events of the year—7th September—is a clue in itself. Because it echoes the next logical iPhone model number, it puts the smartphone squarely in the spotlight, regardless of whether new features are perceived to be radical or not, or even if the handset is called something else entirely.
Our best-informed and most up-to-date product guesses are as follows:
As you can see, no game-changing innovations are expected to be announced, and this is why investor sentiment has been subdued for a fortnight, with shares edging 1.5% lower.
On the other hand, even if Apple doesn’t try to wrong-foot low expectations, current sentiment, as well as downgraded forecasts, are now well baked-in. 41 out of 47 analysts whose recommendations are published by Reuters now rate Apple a buy. That compares with 36 out of 48 who were saying ‘buy’ during September 2015.
A rise in Apple shares isn’t guaranteed immediately after tomorrow’s event, of course, though options volatility does not currently point to swings as large as those seen in March and June.
In short, Apple’s big reveal is unlikely to hit its shares hard, if at all.
So long as the group’s sales and earnings forecasts don’t fall further in the month’s ahead, the stock should at least hold on to the 18% gain made during its recovery from June lows.