By Yasin Ebrahim and Kim Khan
1. Apple Readies Earnings; Investors Eye iPhone Revival
Apple (NASDAQ:AAPL) reports earnings after the bell on Tuesday, with many eager to see whether the its latest slate of phones has revived sales.
Ahead of the earnings report, the spread of the coronavirus over the crucial Chinese New Year has cast doubt over iPhone sales in China. But Wedbush analyst Dan Ives said today the bulk of iPhone sales were already in the bag before the outbreak led to a lockdown of major cities in China.
“While China is a major part of our bull thesis and growth story of Apple for the coming 12 to 18 months, we do not view the impact of this virus epidemic as changing the numbers/merits behind the renaissance of growth in China for FY20/FY21 with a 5G super cycle the longer term driver,” Ives said.
Investing.com analyst Haris Anwar echoed the bullish sentiment.
“Apple’s push to expand its sales from services is clearly succeeding, while growth from iPhones is coming back,” Anwar said. “Any post earnings weakness, in our view, should be taken as a buying opportunity.”
Apple is expected to report earnings of $4.52 a share on revenue of $88.38 billion.
2. Here Comes the Rest of the Earnings Parade
While Apple takes the earnings spotlight, there are plenty more big-name earnings reports to move the market.
Three more Dow components will issue results ahead of trading: Pfizer (NYSE:PFE), 3M (NYSE:MMM) and United Technologies (NYSE:UTX).
After the close of trading, Starbucks (NASDAQ:SBUX) will weigh in.
On average, analysts are predicting a profit of 76 cents per share on revenue of about $7 billion.
U.S. same-store sales are forecast to be up 5% for the quarter, according to FactSet.
The stock looks risky with U.S. and China performance fully priced in, Anwar said.
“But when the next pullback comes, this stock is an attractive buy-and-hold candidate for long-term investors, especially with its hefty dividend growth,” he added. “On the strategy side, Starbucks remains well on course as the chain wins back coffee drinkers not only in its home markets, but also in China.”
Semiconductor bellwether Advanced Micro Devices (NASDAQ:AMD) also reports postmarket.
AMD is forecast to report a profit of 31 cents per share, with revenue coming in at about $2.1 billion.
The “chipmaker is slowly expanding its market share and is well positioned to take advantage of lapses by Intel (NASDAQ:INTC),” Anwar said.
3. Durable Goods, Consumer Confidence Due
As the Federal Open Market Committee starts its two-day meeting on interest rates, there will be some more data to consider ahead of trading.
The Commerce Department will issues its December report on demand for long-lasting goods at 8:30 AM ET (13:30 GMT).
Durable goods orders are expected to have risen 0.3% last month, reversing a November decline, according to economists’ forecasts compiled by Investing.com.
Core durable goods orders, which exclude autos, are seen posting a 0.2% rise.
At 10:00 AM ET, the Conference Board releases its latest measure of consumer sentiment.
The January consumer confidence index is expected to come in at 128 from 126.5 in December.