Today's Piqqem sentiment results for Apple (AAPL) going into their earnings announcement on Tuesday, July 20, surprisingly show that sentiment for Apple has dropped 15 points to the lowest level in the past 15 months.
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The above chart shows Apple’s sentiment dropping by 15 points from the beginning of the quarter thru today. In comparison, sentiment for the Piqqem Technology Index rose 2 points in the same period, which means Apple’s decreasing sentiment was not strongly influenced by market forces. On the Piqqem scale, Apple’s sentiment rating of 34.60 is still considered positive and indicates a quality stock.
This drop in Apple’s sentiment is certainly a cause for concern. Apple has consistently been a top 3 rated company on Piqqem’s top rated list and now doesn’t appear in the top twenty-five. At its peak, Apple had a sentiment rating of 58 at the beginning of the year. Is there any rational for the drop?
In analyzing the sentiment line, I can identify 2 primary issues. On April 29 Steve Jobs wrote his open letter regarding the state of Flash from Apple’s perspective and this corresponded to a 7 point drop in Apple’s sentiment. On June 24, Apple released the iPhone 4 which received some bad reviews and this corresponded to another 5 point drop in sentiment. As of now, both of these events remain more of a PR issue and Apple’s briefing last week about the iPhone 4 should put the company back on track.
Analysts Still Love Apple
Average analyst estimates for the iMac and iPhone giant are $3.10/share in EPS and $14.74 billion in Revenue. 40 analysts track the stock with 15 upward EPS revisions in the last 30 days and no downward EPS revisions in the last 30 days. The 15 upward revisions is a real vote of confidence for the expected performance in the third quarter. Last quarter, Apple beat average analyst expectations by $.88 per share, $3.33/share versus $2.45 per share. Apple’s share price also remains strong with Friday’s close of $249.90 being at 78% of its 52 week price range.
Apple’s Hardware and Networking Sectors Remains Strong
Apple is also part of the Piqqem Technology Sentiment Index which tracks sentiment for 28 technology stocks in the Hardware and Networking, Software and Gaming, Internet and Mobile, and Semiconductor sectors. Apple is part of the hardware and networking sector and it has shown growing strength and remains the strongest of the four technology sectors. So this is positive for Apple.
Previous Sentiment Results Ahead of Apple Earnings
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Sentiment has proven to be a good indicator of upcoming earnings. In the above table, sentiment has remained positive to very positive in the previous 5 quarters for Apple. This positive sentiment has correctly forecasted the general earnings result.
Q3 Earnings – What Does It All Mean?
The financial analysts remain bullish on Apple and the stock price closed Friday in the upper 25% of its 52 price range. Apple’s recent product releases of the iPhone 4 and the iPad have had phenomenal success. But even with this momentum, something has changed. In the end, only Apple knows their actual results and current sentiment points to the iMac and iPhone giant delivering good results on Tuesday, but there may be clouds forming for the future – a future where Apple is no longer the darling underdog, but the 700 pound gorilla that everyone else is gunning for.
About Piqqem Sentiment
Piqqem uses a -100 to 100 scale and leverages the wisdom of crowds and its own proprietary algorithms to capture and calculate sentiment. Any sentiment rating above 25 is considered positive, below 0 is considered negative, while 0-25 is considered neutral. Changes in sentiment are also crucial in understanding and interpreting a company’s sentiment ahead of an event like earnings. Finally, market forces need to be considered to make sure overall market sentiment changes are not overly influencing a stock’s individual sentiment.
Disclosure: No positions
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