Apple (AAPL) will report first quarter earnings tonight after the close. There is a conference call scheduled for 17:00 ET.

Q1 Capital IQ consensus calls for EPS of $4.54 (+8% yr/yr) on revenue of $88.4 bln (+4.7% yr/yr).

The Street is expecting Q1 gross margins of 38.1% vs 38.0% last year. The current consensus is within the company's guidance range of $85.5-89.5 bln and for 37.5-38.5% gross margins.

The Street is expecting Q1 iPhone revenue -1.5% to $51.2 bln, while services revenue is expected to grow +18% to $12.8 bln.

TECHS:

Apple has a $1.35 trillion valuation and trades at ~24 FY20 EPS estimates. The options market is currently pricing in a move of ~5% in either direction by weekly expiration (Friday).

Suppliers to keep on note include:

SWKS, CRUS, AVGO, QRVO, TSM, and QCOM, among others (SMH); SSNLF, LPL (for displays) and LITE, FNSR and IIVI (for FaceID)

Many are assuming AAPL will post strong results and guidance given the popularity of the new iPhones (pent up demand), accessories like AirPods and the Watch, and the shift to services. 

The stock now trades at 24x EPS, which is historically high and twice the multiple it was trading at one year ago after the Q1 warning, but still a slight discount to CPG companies like PEP, PG and KO.

Investors believe the stock has risen for good reason and the valuation is justified. It would be surprising to see a sell the news reaction given the stock's recent run and the subsequent elevated expectations. That said, a lot of people are expecting the stock to get faded even though Apple's market position/outlook remains quite strong which can buoy the stock.

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