FORTUNE -- "We see a reasonable probability that Apple will miss consensus revenue expectations due to macroeconomic weakness in China and Europe, a product cycle lull in the iPhone, a later than expected introduction of the new iPad into China, and the late quarter introduction of new Mac notebooks."
So begins the note to clients issued Friday by Bernstein's Toni Sacconaghi in which he lowered most of his estimates, from iPhone unit sales to his top to bottom lines, for Apple's (aapl) third fiscal quarter -- one of the factors that helped drive the company's shares down $10.02 (1.63%) for the day.
"We are a bit torn on Apple's stock," Bernstein concluded, "but on balance believe that it risks treading water or underperforming coming out of earnings."
"After speaking with them, I think this could potentially be a blowout quarter. The most recent blowout quarters we've seen in Apple took place in fiscal Q1 2012, fiscal Q3 2011 and fiscal Q2 2010. So they don't happen THAT often. I think this quarter makes for a good set-up.
"In fact, I don't think I have felt more confident in how Apple is going to respond to earnings almost regardless of what it reports this quarter. Apple is almost certainly going to gap-up on earnings. I know the trading action is weak right now, but that is a major red herring.
"I couldn't be anymore confident in how the stock will react on earnings. That's because Apple has gapped-up in 20 out of the last 26 earnings reports. Three of the failures happened in Q1 2006, 2007, and 2008 when Apple had a consistent trend of selling off on Q1 earnings. The other three failures had some major extenuating circumstances. First we have two back to back sell-offs in Q4 2010 and Q4 2011. One was the result of Apple being extremely overbought (Q2 2010) and the other was the result of Apple missing. The 6th sell-off happened in Q3 2008 which was the result of Apple reporting in a very poor market environment. So even if you don't discount or explain those six times Apple has sold-off on earnings (three of which happened ages ago) the fact of the matter is, Apple gaps-up 80% of the time. [See chart below the fold.]
"So I think market participants really need to be thinking twice about selling into earnings right now. As investor will soon find out, that will be a major mistake this quarter. If you sell ahead of the results, you will likely miss a major gap-up on earnings."
Apple will report its Q3 2012 earnings after the markets close on Tuesday, July 24. See here for our round-up of analysts' estimates.
Below the fold: Zaky's chart.
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