Apple Inc. (Nasdaq: AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services.

Key Highlights

• RSI Indicating a Bullish Bias: The 14-day RSI is hovering at 64.35, which implies that bulls are taking control and Apple counter is witnessing strong buying momentum.

• Stock is Hovering in a Long-term Bullish Price Zone: Apple shares are hovering in a long-term bullish zone with stock traded well above the crucial long-term support levels of 200-day SMA. The stock closed well above the crucial short-term support level of 50-day SMA, which implies that bullish trend in the stock is largely intact.

Source: REFINITIV, Analysis by Kalkine Group

• Solid Q2FY21 Performance: The group reported solid jump in net sales in the second quarter of 2021, with total net sales up by 54% against the same quarter of the previous financial year, driven by 66% surge in the Iphone sales on a YoY basis, 70% increase in the Mac sales, 79% surge in the iPad sales, 25% jump in the sales of wearable, home and accessories, and 27% increase in service sales.

Financial Highlights: Q2FY21

Source: Company Filing

• Total net sales increased 54% or USD 31.3 billion during the second quarter of 2021 compared to the same quarter in 2020, driven by higher net sales in all Products and Services categories in each of the Company’s reportable segments.
• Sales in Greater China surged by 87%, European market sales soared up by 56%, America’s sales increased by 35%, sales in Japan soared up by 49% and Asia Pacific sales increased by 94% in the quarter just gone by compared to the same quarter of the previous financial year.
• Greater China net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPhone and iPad. The strength of the Chinese renminbi relative to the U.S. dollar had a favorable impact on Greater China net sales during the second quarter and first six months of 2021.
• Product gross margin improved to 36.1% in the Q2FY21 against 30.3% in Q2FY20, and Services gross margin improved to 70.1% from 65.4% in the same quarter of the previous financial year.
  

Risk Associated to Investment

A resurgence in the COVID-19 cases could have a weigh on the group’s performance, with many of the Company’s retail stores, as well as channel partner points of sale, might be closed temporarily at various times.

Stock Recommendation: The company reported a decent result in Q2FY21. The company’s existing balances of cash, cash equivalents, seems to be sufficient to satisfy the company’s working capital needs, capital asset purchases, dividends, share repurchases, debt repayments and other liquidity requirements associated with its existing operations. Further, the launch of new products is likely to benefit company’s sales further. Therefore, based on the above rationale, we recommend a “Hold” rating on the stock at the closing price of USD 146.15 on July 20, 2021.

Source: Refinitiv, Analysis by Kalkine Group

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