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Apple Stock Losing Momentum?

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  • Description

    JMP Securities’ Alex Guanta on concerns over the outlook for Apple shares and the company’s earnings.

  • Duration 3:26
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Rally and Apple Stock is a losing momentum after hitting an all time high just two weeks ago the stock.

-- a correction mode last week that is down nearly 10% but expectations.

Are pretty high that tomorrow's earnings reports will bring good news.

But could such expectations be dangerous for the stock joining us now.

Is Alex got -- he is JJ and analysts so Alex.

It's change in stock momentum is very -- we've seen before was certain stocks when it loses that momentum.

That can mean trouble is it is it in that downward trend where even a fairly good earnings report tomorrow won't help -- It's a little bit early to say that it's in a downward trend however there have been a number of ominous signs that have emerged as of late.

Investors are spooked going into the call based on some of the weakness that Qualcomm guided to some of the weakness in the Verizon numbers and certainly.

The NAND flash market -- got investors nervous as well apple is the world's biggest consumer of NAND.

So we're going into a thirteen week quarter the company guided to eight dollars and fifty cents an earnings but the street is looking for more.

Than ten dollars and earnings so certainly.

At least on the streets part the elevate the expectations are up but I think the warning signs are there -- okay.

And that's the stock let's look at the products for -- -- efforts are gonna just I pat and I finally there are other products after all but.

I heard that 80%.

Of of all of the products that apple gets revenue from -- just those two products right iPad and iPhone.

Those certainly are the two most important categories for apple right is -- -- that is there a danger of relying on just two products were 80% of your revenue.

Well certainly I think that's one of the key risk factors in this name.

Not only talking about just to product categories but you're talking about a very narrow line up within that that's what we're seeing in the in -- camp.

You see a much greater variety of screen sizes and price points.

And I think that is one of the key risk factors for the stock.

All right we talked stock products let's talk pricing for a second have they got the pricing about right they've got so many competitors now -- their products.

On -- cheaper level what about their prices.

Well I think apple delivers great value for the price -- paid for those products so.

I don't so much have a concern on the pricing front may be on the cost of manufacturing front again.

We saw last quarter a really nice move in gross margins up.

Tech stocks tend to do badly when margins come under pressure and we all know about the labor concerns out of China.

-- we all know that component vendors want to get paid for those components as well that's something that I'm looking at with apple yeah and of course.

Labor -- labor costs are going up and try to that could affect everything carriers what about the carriers particularly Verizon any concerns there.

Well so Verizon did talk about wanting to have alternatives -- leverage vs apple wouldn't say that specifically but that's exactly what they met in terms of talking about the options that they're going to have with windows later on this year.

You know we know that apple has been in many respects the carrier's best friend but in another aspect when apple gets too much.

Share of -- it.

That is a problem that the carriers are starting to talk about it and they have alternatives great stuff Alex thank you so much I feel prepared to -- -- it's -- JMB securities managing director and senior research analyst great to see a thanks a million.

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