Second-quarter earnings season has been a mixed bag for major U.S. tech companies, but Apple Inc. (Nasdaq: AAPL ) investors are hoping AAPL stock will be one of the winners when the company reports fiscal third-quarter earnings on Tuesday afternoon.
Analysts are expecting a relatively quiet quarter from Apple , but investors will be watching guidance and China sales closely.
[See: The 10 Most Valuable Tech Companies in the World .]
Consensus analyst estimates are calling for third-quarter earnings per share of $2.18, up from $1.67 in the same quarter a year ago. Analysts are also expecting revenue of $52.3 billion, up 15.3 percent.
Analysts are predicting Apple will report 42 million iPhones sold in the quarter, up from 41 million last year.
BMO Capital Markets analyst Tim Long says Apple probably won’t shock Wall Street with its third-quarter numbers. Long expects slightly below-consensus EPS of $2.17 and revenue of $51.8 billion in the third quarter. However, BMO’s fourth-quarter estimates are much more bearish, suggesting guidance could be key on Tuesday. Long is anticipating fourth-quarter EPS of $2.44 and revenue of $55.9 billion, well below consensus analyst estimates of $2.64 and $59.5 billion, respectively.
Long says iPhone replacement cycles have lengthened from an average of 2.2 years to 2.5 years in the past two years, and it could continue to grow if Apple doesn’t deliver compelling products.
In 2017, roughly 20 percent of Apple’s total revenue came from China. Investors will be watching closely for any commentary related to the ongoing U.S. trade war with China.
[See: 9 Ways to Invest in Red-Hot Tech Stocks .]
Long says Apple has been losing market share in China and will likely report flat quarter-over-quarter China revenue growth on Tuesday.
GBH Insights head of technology research Daniel Ives says that, while Apple’s business is mostly insulated, the stock faces potential headline risk as the trade dispute plays out.
“The last thing Apple wants to see is a trade war break out going into its next major iPhone product cycle set to take place over the next three to six months, [which would] potentially put a wrench in supply chain and/or [create] demand issues within China,” Ives says.
GBH Insights has a “highly attractive” rating and $200 price target for Apple. BMO has a “market perform” rating and $184 target for AAPL stock .