AAPL Shares Fall 7 Percent In NASDAQ After-Hours On Weak Revenue Forecast

Shares of Apple Inc. (NASDAQ: AAPL) sold-off by close to 7 percent in heavy trading volume in this evening’s NASDAQ after-hours session. The technology giant released its fiscal 2015 third quarter financial results today, reporting earnings of $1.85 per AAPL share, topping expectations by $0.04. Sales came in at $49.6 billion, also beating estimates of $49.4 billion.

Apple provided sales guidance of $49 to $51 billion for the fourth quarter of 2015. That is below the current consensus of $51.05 billion and appears to have brought sellers into the market for AAPL shares. With this evening’s sell-off, AAPL shares sit about 9 percent off recent highs.

The good news is that Apple sold 47.5 million iPhones in the third quarter. That’s up an astonishing 35 percent from third quarter 2014 levels. Apple also reported that year over year sales growth in China is up more than 100 percent to $13.2 billion. Chief Executive Tim Cook asserts that worry about China is, “probably overstated.”

Apple also demonstrated pricing power: based its larger screen, the average price of an iPhone increased from $100 to $662. Not many markets allow producers to grow prices such dramatic amounts, even when additional features are added.

Outlook For AAPL Shares

Before this evening’s earnings announcement, 39 research firms had published ratings on AAPL shares with an average rating of 2.0, where 1.0 is a strong buy and 5.0 is a sell.

Thirty-six analysts had published sales estimates for AAPL ranging from $46.7 billion to $58.3 billion for the current, fourth fiscal quarter of 2015. This evening’s guidance of $49 to $51 billion falls within the lower end of this range.

The consensus among 38 research firms for AAPL EPS is $1.86 for the current quarter. AAPL EPS is forecast at $9.08 and $9.77 for full fiscal 2015 and 2016.

This represents EPS growth for AAPL shares of 40.8 percent and 7.6 percent in each year. The AAPL share market is disappointed that Apple’s guidance was not higher. The 7.6 percent forecast for AAPL EPS growth in 2016 is meager.

Revisions TO AAPL EPS Estimates Likely

Over the past 90 days, analysts had significantly increased their full year 2015 EPS estimates for AAPL shares from $8.69 to $9.08. Over the same period, the AAPL consensus estimate for 2016 EPS increased from $9.38 to $9.77: also not a small amount. Perhaps today’s earnings announcement and guidance is a sign from Apple management to AAPL shareholders and analysts to reel-in expectations to more attainable levels.

Revisions to analysts’ AAPL EPS and sales estimates as well as AAPL price targets and ratings are likely in the coming days.

[Photo By Justin Sullivan / Getty Images]