Why analysts are bullish on Apple stock

Yahoo Finance tech editor Dan Howley breaks down the latest in the antitrust app store hearrings and why analysts are bullish on Apple's stock ahead of its earnings announcement.

Video transcript

ADAM SHAPIRO: Well, there's nothing phony baloney about what's happening on Capitol Hill-- a Senate hearing, antitrust hearing regarding Apple's store. Dan Howley follows all things Apple for us. And where do we stand on this? Is it the Mel Brooks scenario, or is there something more nefarious going on?

DAN HOWLEY: I think-- I have never seen "Blazing Saddles," so I have no idea how to make that comparison. I don't know why I haven't seen it yet. But I will say that the hearing itself is particularly serious, especially after Apple's event yesterday. Now, there's three companies that are going to be there in addition to Apple and Google, by the way-- they're Match Group, Tile, as well as Spotify.

Now, the reason why it's so important that those three are there is because yesterday, Apple announced that it's getting into the podcast game with a subscription podcast service. That would certainly rankle Spotify's feathers, because Apple and Spotify have kind of an acrimonious relationship-- basically Spotify saying that Apple makes it more difficult for them to operate on their platform than necessary, simply because Apple has Apple Music and wants to beat out Spotify.

And then Tile, because Tile has accused Apple of making it difficult to use their service on Apple's products, specifically by requiring people to reply to requests from their iPhone to allow Tile to track their location or use location services. Now, Apple just launched its AirTags, which is basically a type of Tile device. And it doesn't have to ask those kinds of requests over and over again.

So both of those companies really kind of have more ammunition after yesterday in Apple's event for today's hearing. Now, whether or not Apple will come-- anything will come of this as far as Apple dealing with antitrust here in the US, that remains to be seen. Basically, the chief argument is that Apple's policies in the App Store aren't used fairly across the board. There may be different circumstances that they allow leniency to some developers.

We saw that with Amazon to a degree in the deal for Amazon Prime Video, getting that on iOS. And so that's really what the crux of the argument is here from these app developers. Apple doesn't make it easy for them, and they also charge, by the way, 30% for any apps sold through their store or any services sold through their store if they make above $1 million a year in revenue.

On the flip side, Apple says, look, we built this App Store. This is ours. We provide you with the tools to be able to make millions off of the App Store and reach our huge array of customers. And you know, look, Apple customers pay more than Google customers do for apps. So Apple basically saying, look, this wouldn't exist if it wasn't for us.

You should, frankly, be thankful that it's there. And the app developers are saying, you know, you guys are just making it incredibly unfair for us, and you're also charging us more than we would like you to charge us by forcing us to use your sales platform. So really, it's kind of back and forth. We don't know where it's going to go yet. We've heard of investigations, obviously, into Apple. And so far, we've only gotten anything from Google and Amazon-- Facebook as far as antitrust goes.

SEANA SMITH: Well, Dan, speaking of Apple right now, I mean, we're seeing the shares move slightly to the upside today-- up just around 2/10 of a percent. But we got this bullish note out from Katy Huberty at Morgan Stanley-- people really listen to what she has to say about Apple. And she's pretty bullish on what we could expect during their earnings report next week. What did you make of that note?

DAN HOWLEY: Yeah, it looks like it's mostly kind of big on what Apple announced at its previous event as well as the capability of iPhone to keep doing well as far as sales go. There's also talk of kind of the rerating of the stock price just based on its performance in the past few months.

You know, Apple really is the type of company-- look, it's cyclical like everything else because it's a consumer goods company. They do their best in the previous quarter-- Q4, Q1, going into a red Q2 right now. So I think that for Apple, it really is going to focus on whether or not the iPhone sustained the sales that it saw in the holiday season.

And then the back to school or, rather, work from home and school from home sales had done very well for Mac and iPad. So whether or not they can keep up that momentum with these new iMax and iPads, you know, that would be interesting to see. We're not going to get that in the most recent quarter or the current quarter as much, just because they just went on sale-- or aren't even on sale yet. They're not even in consumers' hands yet, they're going on sale soon and will hit consumers' hands in the second half of May.

That kind of leads you to believe that there may be some delays in shipping as a result of this big chip shortage that we're experiencing. But, look, it's all about if they can keep updating their portfolio of products and keep customers interested. And it seems like they're able to do that.