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Apple is rising ahead of its earnings report

May 1, 2018, 20:17 IST

Markets Insider

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Shares of Apple opened up 0.25%, at $166.60, Tuesday morning and were continuing to rise slightly, as high as 1%, ahead of the company's second quarter earnings report after Tuesday's closing bell.

All eyes will be on Apple's iPhone revenue, which many Wall Street analysts have slashed their forecasts of in recent weeks.

"China smartphone activation data points to a reversal in Apple share trajectory with losses through March that presents a meaningful headwind in the largest smartphone market," Morgan Stanley analyst Katy Huberty said in a note to clients last week slashing her forecast for Chinese iPhone sales.

Additionally, GBH insights analyst Daniel Ives said Wall Street is in "full panic mode" ahead of Tuesday's report.

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iPhone revenue has begun to decline as a share of overall income in recent quarters. Apple Services, which includes iTunes and the App Store, has been picking up the slack, and is now Apple's faster growing segment at nearly $30 billion in revenue last year.

"As more durable, higher margin Services become the central driver of growth, we see room for further re-rating of AAPL shares," Morgan Stanley's Huberty said.

With expectations so low, and a slump in share price since the beginning of 2018, millennial investors on the stock trading app Robinhood were gobbling up shares ahead of the announcement.

Wall Street analysts have an average price target of $192, a roughly 17% upside to Tuesday's opening price. Shares of Apple have declined 3% since the beginning of 2018.

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