AAPL Stock Weekly Outlook: Fiscal Q1 earnings report hits

iPhone 6s tumble

The Apple stock (NASDAQ:AAPL) rally seen on Friday held prices over $100 into Tuesday this week. After the markets closed on January 26, Apple released their highly anticipated fiscal Q1 earnings report. Wednesday trading reflected investors' concerns over flat iPhone sales, despite a record-setting holiday quarter. AAPL slumped on Wednesday, only to bottom out at $92.39 on Thursday morning. Thanks to a small bounce on Friday, shares closed at $97.34 going into the weekend. Overall, a drop in price for Apple shares of $4.18 (-4.12%) occurred over the week.

The most significant AAPL news of the week broke on Tuesday, when Apple made its fiscal Q1 earnings report public. Apple also crossed a significant milestone, reaching an installed user base of over one billion active devices. Here is a brief rundown comparing the most recent quarter to the same time last year:

Total fiscal Q1 revenue in 2016: $75.9 billion (+$1.3 billion)
iPhone sales: 74.8 million (+0.3 million)
iPad sales: 16.1 million (-5.3 million)
Mac computer sales: 5.3 million (-0.2 million)

Apple CFO Luca Maestri explained:

"Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment. We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program."

Total profits for the holiday quarter were $18.4 billion, with Services and Other Products categories of revenue increasing by 26% and 62% respectively. Other Products includes the Apple Watch and Apple TV, although Apple declined to provide specific sales figures. Despite the falloff in iPad sales, Apple currently commands 85% of the US tablet market, and the company gained PC market share this quarter.

Although it was a record-breaking quarter, Apple CEO Tim Cook tempered expectations for fiscal Q2 revenues, expecting iPhone sales to decrease year-over-year for the first time in history. The company is projecting revenue between $50 and $53 billion. Discussing the earnings report on a conference call, Cook cited the fact that 60% of the iPhone user base has not yet upgraded to the larger iPhone 6 or iPhone 6s.

While many major analysts cut their price targets by up to $20 per share, none changed their rating to Sell. In fact, the overwhelming majority still rate AAPL as Buy or Outperform. Ming-Chi Kuo (KGI Securities) reminded investors that major camera upgrades are coming to the iPhone 7. With a new 4-inch iPhone also in the works as well as the iPad 3 expected in March, there's plenty to look forward to in the world of Apple.