“When Apple reports earnings in January for its first fiscal quarter of 2009, the investment community could be greeted with the mother of all earnings blow-outs. The analyst consensus estimates have gotten so absurdly bearish, that Apple might beat revenue expectations by as much as $1.210 billion dollars—and that’s with a mild contraction in iPod sales! I can’t remember the last time any company beat revenue expectations by a full $1.2 billion, but I can only imagine how the stock price would react on such a beat. Almost as impressive is the 36.1% beat on analyst EPS estimates that I am confident Apple will achieve,” Andy Zaky writes for Bullish Cross.
“The analysts are currently modeling for Apple to earn $1.44 in EPS on $10.080 billion in revenue. By contrast, I’m looking for Apple to earn closer to $1.96 in EPS on $11.29 billion in revenue. That would mark the largest revenue beat by any company I’ve ever seen, and will generally be an all out fantasy-like decimation of analyst consensus estimates. Depending on where the stock price is at the time of earnings, where the consensus and whisper numbers stand going into the results, and the market’s current sentiment on equities, I wouldn’t be surprised to see a 20 point move in the stock price. This is a once in a blue moon type of earnings situation that will likely be far more surprising than Google’s results last April,” Zaky writes.
“The general bearishness surrounding Apple’s fiscal Q1 is largely due to the uncertainty regarding the degree of contraction in consumer spending for the months of November and December. The analysts, who have already been overly bearish on the stock as it is (which has lead to Apple beating iPhone estimates by 72% in Q4), have seriously gone too far this quarter with their earnings estimates. It has gotten to the point of irrational bearish exuberance, that the estimates no longer reflect even a scintilla of financial reality. The analysts have been consistently wrong in predicting Apple’s earnings results and this time they’re going to get their ‘hats handed to them’ as the expression goes,” Zaky writes.
Even on in extremely bearish scenario where iPods unit sales and iPod revenue see significant contraction, and where Macintosh sales see flat sequential growth despite its recent refresh across its line of notebook computers, Apple will still beat revenue expectations by nearly half a billion dollars—that’s on a pretty bearish scenario,” Zaky explains.
Much more in the comprehensive full article – highly recommended – here.