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What to Expect from Apple in 2019 with AAPL Stock Still Down 25%

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Apple (AAPL - Free Report) shares rest roughly 25% below their 52-week high as investors and Wall Street try to decipher what’s next for the iPhone giant. At this point, the company’s slowdown has been well documented, but let’s check out some of Apple’s upcoming projects and estimates to help us see what we might expect from AAPL stock going forward.

Recent News

Apple and Goldman Sachs (GS - Free Report) are set to offer a credit card that pairs with an iPhone app that aims to help users manage their money, according to the Wall Street Journal. Employees are reportedly testing the card at the moment, with it expected to officially launch later this year. The move is part of Apple’s larger financial tech ambitions that include Apple Pay and could end up growing as Square (SQ - Free Report) , PayPal (PYPL - Free Report) , and others try to shake up the credit card and banking industry.

Tim Cook’s company is also projected to introduce its streaming TV service within the next few months. Apple has poured over $1 billion into original content to try to eventually take on Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , Disney (DIS - Free Report) , and others. But some analysts have serious doubts about the impact Apple’s new streaming TV service will have, especially in the early days.

Apple is also expected to expand its gaming unit and debut a new subscription news service. Plus, Apple’s CEO is confident that Apple Watch-style health offerings will play a key role in the company’s future.

AAPL saw its stock close regular trading Monday up 0.73% at $174.23 a share. This marked a roughly 25% downturn from its 52-week high of $233.47 share, despite its post-Christmas resurgence along with broader market and fellow tech powers like Facebook (FB - Free Report) .

Outlook & Earnings Trends

Apple and many investors had known for years that the company needed to expand beyond the iPhone as the market became more saturated. Still, last quarter might have been Wall Street’s big wake up call after iPhone revenues plummeted 15% to help overall sales fall 4.5%. Going forward, Apple faces difficult comps and the economic slowdown in China could make matters worse.

Looking ahead, Apple’s fiscal Q2 revenues are projected to slip 5.8% to hit $57.60 billion, based on our current Zacks Consensus Estimate. Apple’s full-year fiscal 2019 revenues are expected to sink 4.2%. On top of that, Apple’s fiscal 2020 revenues are also projected to come in below 2018’s $265.60 billion.

More specifically, Q2 iPhone revenues are projected to sink 13% from $38.03 billion in the year-ago period to $32.97 billion, based on our current NFM estimate. Apple’s revenues in Greater China are projected to fall roughly 7% from $13.02 billion to $12.15 billion. This would follow the first quarter’s 27% downturn in the key region that includes Hong Kong and Taiwan and accounts for roughly 20% of total AAPL sales.

Meanwhile, Apple’s adjusted Q2 earnings are projected to fall 12.8%, with its full-year 2019 EPS figure expected to dip 4.4%. We can also see that Apple’s earnings estimate revisions have trended almost completely in the wrong direction over the last 30 days.

 

Bottom Line

Apple said that larger macroeconomic factors contributed to its first-quarter downturn in the world’s second-largest economy, which also impacted Alibaba (BABA - Free Report) and many others. Nonetheless, these less-than-ideal conditions might remain in the country where Apple has always found it difficult to gain market share against firms like Huawei, Xiaomi, and other more affordable smartphone options. And we already know that the company isn’t expected to see overall iPhone sales grow much since Apple said it will no longer breakdown unit sales.

Investors and Wall Street will likely look to Apple’s services business for signs of strength in the near-term. The unit, which includes Spotify (SPOT - Free Report) challenger Apple Music, is expected to see its Q2 revenues reach $10.93 billion. This would mark a roughly 19% climb to match the holiday quarter’s growth.

Apple stock could remain shaky in 2019 as the market tries to process what’s next for the company and assess what impact its newest offerings might have on its top and bottom lines. In the end, Apple is still one of the world’s richest companies and boasts roughly 1.3 billion active devices globally. AAPL shares also rest well below their 52-week high and the company is a dividend payer.

Therefore, it’s not too hard to see Apple stock at least trying to climb toward its previous highs at some point in the relatively near future.

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