Here’s Why Apple Stock and Boeing Are Surging After Earnings

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U.S. equities are rebounding on Wednesday thanks to an easing of coronavirus fears — on Wall Street at least — as well as positive earnings results from two of the most important stocks in the market right now: Apple (NASDAQ:AAPL) and Boeing (NYSE:BA), both of which reported results since Tuesday.

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Apple shares are up almost 3% in intra-day trading, pushing the company’s year-to-date gains above 11%. What a strong way to start 2020. And beleaguered Boeing shares are having a similar day, up 2.7%. After a rough few weeks, what about its earnings report has the market cheering?

Want the answer to that question and more? Here’s a breakdown of what investors are excited about.

What’s Up With Apple Stock?

Source: Chart by StockCharts.com

After just a one-day drop on Monday, Apple’s shares are already pushing to new record highs. And that’s despite the iPhone maker’s deep reliance on the Chinese economy both as a source of its products (supply chain connection) and fresh demand (from Chinese consumers).

Quarterly revenue increased 9% to a new record of nearly $92 billion while net income increased 11% to more than $22 billion, also a record. Sales of its iPhone increased nearly 8% year-over-year to nearly $56 billion, which was $5 billion ahead of expectations. All eyes are now on  a looming update to the iPhone lineup that should include an all-new handset design to retire the iPhone X chassis that debuted in 2017.

Rumors are that the new models will have thinner OLED screens, a notchless front panel and better batteries, as well as a design that echoes the popular iPhone 4 and current iPad Pro with a squared-off metal frame. Another big feature will be the addition of 5G wireless modems, which promise a huge jump in connectivity speed. No more waiting for that YouTube video to load.

Analysts are feeling confident following the news, with Maxim Group raising their rating to “hold.” Estimate-beating iPhone revenue growth nullified their “sell” rating on the name. Cowen analysts also raised their price target on Apple stock from $350 to $370.

Boeing Stock Is Taking Flight

Source: Chart by StockCharts.com

Although Boeing reported its first annual loss in 22 years, shares are surging higher as the company continues to react to a difficult environment. This comes after prices found support near the lows set in late 2018. Some good news could go a long way, resulting in a test of the upper end of its two-year trading range near $400, which would be worth a gain of some 25% from here.

This comes despite the company reporting a loss of $2.33 per share for the quarter, 50 cents below estimates, on nearly a 40% decline in revenues as the 737 Max grounding continues to gnaw on results. Commercial aircraft revenue dropped nearly 60% from the year prior as 737 deliveries plummeted. Management noted it would make another cut in 787 Dreamliner production and booked more charges against its military tanker and space-taxi programs.

So why are shares rising? Because the Street is viewing it as a kitchen sink quarter where the new CEO is putting in all the bad news now so that he can surprise to the upside in subsequent quarters. That’s according to Bloomberg Intelligence’s George Ferguson. Also, the company’s $2.7 billion cash burn was smaller than feared. And management appears confident the 737 Max will be flying again by the middle of the year.

In an interview with CNBC after reporting results, CEO Dave Calhoun added that he doesn’t see any long-term impact on demand from the coronavirus and was “very optimistic” that orders from China will soon start pouring in.

As of this writing, William Roth did not hold any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/01/heres-why-apple-stock-and-boeing-are-surging-after-earnings/.

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