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Can the iPhone 7 help Apple cement its recent recovery when it reveals its fourth quarter earnings release on Tuesday? It’s been a fairly tumultuous year for Apple, with its market-darling status called into question a couple of times. The continuation of its last-2015 decline left the stock at a low of $92 at the start of February, only for an aggressive resurgence to take it back to $112 by the middle of April. This growth quickly came to a close in the aftermath of the firm’s second quarter report, the negative reaction to which briefly left Apple below the $90 mark. Since then, however, the stock has seen its second major recovery of the year, the combination of a solid third quarter update and the release of the iPhone 7 taking it to a 2016 peak of $118.11. It now sits at a current trading price of $117.19 (IT-Finance.com 21/10/2016). (Source: IT-Finance.com 21/10/2016)That recovery-sparking Q3 statement came towards the end of July, and caused Apple to jump nearly 7% in a single session. Despite falling 43 cents year-on-year, earnings per share of $1.42 was a tad higher than expected, as was revenue of $42.4 billion (itself a 14.5% drop from Q3 2015). Add onto that iPhone sales of 40.4 million against the 40.02 forecast and investors were more relieved than impressed, taking the edge off news of a 33% plunge in Chinese sales to $8.8 billion. In terms of Apple’s fourth quarter next week, the company is expected to post revenue between $45.5 billion to $47.5 billion – a 7.8% to 11.7% decline year-on-year – alongside a 15.8% slide in earnings per share to $1.65. The big question mark is over iPhone sales. The sluggish (well, by the company’s own high standards) performance of its flagship product has blighted Apple for the last few quarters, so investors will be looking to see whether the iPhone 7 has the nascent popularity to inspire a turnaround, especially in China. The phone only came out a few weeks before the end of the reported period, so the guidance for its fiscal first quarter will arguably be even more important. Apple Inc has a consensus rating of ‘Buy’ with an average target price of $127.68.
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