All About Services for Apple (AAPL) Tonight - Lynx Equity Strategies
Lynx Equity Strategies analysts KC Rajkumar and Jahanara Nissar weighed in ahead of Apple's (NASDAQ: AAPL) earnings after the close and proclaim it is all about services for the iPhone maker. They suggested hedge funds are either positioned short or on the sidelines for now. While shorts acknowledge shares could move up given low expectations, they are wiling to withstand near-term pain. They see the multiple as unlikely to expand.
Their view: "We have been negative on iPhone prospects to a degree that we pointed to the likelihood of the distress filtering to general pace of hiring at AAPL and to their paring down of some non-core projects such as autonomous vehicle. This earnings call boils down to Services. The bull case expects positive Services commentary on the call, including impressive Service margin guidance. The Street views the Company as being at a cross road. Catalysts are not well understood despite the cheap valuation. It is hard to see incremental capital adding to positions meaningfully unless Services delivers solidly to the upside. The stock trades on estimate revisions so we would not be surprised to see strength tonight fade."