Apple Earnings Preview: Has Sentiment Become Too Negative?

| About: Apple Inc. (AAPL)
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Summary

Virtually every analyst comment is now negative or unexcited coming into tonight's call.

Stock now tied to the iPhone upgrade cycle.

Revenue revisions have been negative.

Biggest negative from a contrarian perspective is that Barron's money manager poll still has Apple as the No. 1 stock - so who doesn't own the stock then ?

Apple (NASDAQ:AAPL) reports tonight after the bell, with analyst consensus looking for $2.00 per share on $51.9 billion in revenue for expected year-over-year declines of -14% and -10%.

Talking about Apple on the weekly blog update this past weekend, given Apple's 3% market cap weighting and 5% - 6% earnings weight, Apple is a big deal in terms of S&P 500 earnings.

While my own expectations for Apple are pretty subdued tonight given the persistent negative revenue revisions, listening to the never-ending voices on CNBC and Bloomberg on Apple's earnings release, I also wondered, "so who doesn't hate the stock now too?"

The biggest contrarian sign that Apple might need to trade lower is the Barron's Big Money Poll that was recently released that shows Apple is still the buy-side's favorite stock. Can that really be a bullish indicator since you would have to think that all the big money is still long the stock?

In terms of my own clients, Apple's weighting has been reduced from 4% last summer of 2015 to 1.95% this week, so Apple is currently underweight relative to its position in the S&P 500.

However the fact that the public commentary about the stock is now entirely negative has me thinking all the bad news is in the stock.

Most folks are expecting modest guidance for Q3 2016, which consensus is now $1.76 for $47.3 billion, which are y/y declines of -5% and -5% respectively.

From a sentiment or contrarian perspective, the uniform negativity now has my attention. It's unlikely I would add to the stock before tonight's earnings, but I'll be interested to see if forward estimates change after tonight.

I sure wish that Barron's Big Money poll showed something other than what it did.

Disclosure: I am/we are long AAPL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.