Will Apple's Stock Suffer From A 'Sell The News' Reaction?

Investors have valid reasons to be nervous heading into Apple Inc. AAPL's earnings report after Tuesday's market close.

For starters, there's the possibility a key update to the upcoming iPhone 8 release will result in a "sell the news" reaction, Robert Cihra of Guggenheim Securities said during CNBC's "Squawk Alley" segment. While this is a possibility, the analyst expects a different outcome in which Apple will generate a lot of "excitement" for the iPhone with many compelling and new features.

"There is more to get excited about this time than in the last couple of years," the analyst added.

Steven Milunovich of UBS shares a similar view and thinks the new iPhone will be akin to a "pig in the python" -- that's a scenario in which Apple sees a huge increase in demand in an otherwise level pattern.

Many iPhone customers haven't bought a new phone in years and the iPhone 8 will be compelling enough to generate "substantial upgrades," the analyst added.

On the other hand, Apple is likely to guide its September ending quarter to not include any new iPhone 8 sales and investors may be disappointed. As such, there is some risk to owning the stock in the quarter but at the end of the day iPhone 8 sales will be pushed into another quarter and not eliminated altogether.

After the close, Apple is projected to post quarterly earnings at $1.57 per share on revenue of $44.8 billion. Will it beat? $AAPL

— Benzinga.com (@Benzinga) August 1, 2017

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