Wall Street responds favorably to Apple's WWDC announcements

[AppleInsider]

While the iPhone 3G S was generally in line with expectations, lowered Mac notebook and iPhone 3G pricing, combined with favorable upgrade pricing for Snow Leopard, made a positive impression on most Wall Street analysts, many of which issued positive reactions Tuesday while increasing their Apple price targets.

Piper Jaffray: Buy ($180)

Gene Munster maintained a Buy rating with an unchanged share price target of $180 based on the Mac product line price reductions at WWDC that increase confidence in future sales, and pricing on the iPhone 3G coming in more aggressively than expected.

Munster notes that, historically, a “50% cut in iPhone pricing has increased unit demand by 2x" resulting in an increase in their iPhone sales estimates over the next 3 quarters. Regarding the Mac product price reductions, Munster was “surprised by Apple's aggressive reductions" but is “increasingly confident" in estimating near-term Mac sales.

Kaufman Brothers: Buy ($176)

Shaw Wu at Kaufman Brothers raised his 12-month price target to $176 from $160, praising Apple’s move to “hand over the baton to the next generation of leaders."

Based on the pressure the new iPhone 3G S should place on competitors, along with lower-cost portable Macs and aggressive Snow Leopard pricing, Wu believes “Apple is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages with its vertically integrated model."

Oppenheimer: Outperform ($160)

Oppenheimer’s Yair Reiner maintains his Outperform rating with a target share price of $160.

Regarding Apple’s WWDC announcements, Yair concludes, “Overall, the update strikes us as fairly remarkable in its breadth, if not depth. Skeptics may worry that the new price cuts will pressure margins. We believe they are more likely to lead to stronger demand (because of elasticity) and improved high-end product mix."

Barclay’s Capital: 1-Overweight ($173)

Barclay’s Ben Reitzes reiterates his Overweight rating of Apple shares while raising his share price estimate to $173 from $155.

Reitzes says, “Apple remains our top pick given its new products & prospects for strong free cash flow" and “new products will stimulate incremental demand," prompting him to raise his share price estimate accordingly.

Needham & Company: Strong Buy ($200)

Needham & Company’s Charlie Wolf maintains a Strong Buy recommendation with a price target of $200, citing the iPhone 3.0 firmware and App Store as key drivers behind his recommendation.

On the Mac side, Wolf notes that Apple has “added to its market share since the beginning of the year" despite the “lousy" economic conditions. The App Store’s success and upcoming 3.0 firmware are most impressive and represent “the key upside in Apple story that should propel the company’s share price toward our $200 price target over the coming year."

Caris & Company: Buy ($170)

Claris & Company’s Robert Chira raised his stock price target to $170 from $150 with a Buy recommendation, counting on recent product refreshes and price cuts across its iPhone, MacBook, and OS X lines.

The new iPhone 3G S and remaining 3G 8GB model priced at $99, along with the upcoming 3.0 firmware with additional features support growth in Apple’s share of the smartphone market and the overall cell phone market. Chira states that “We continue to see Apple’s iPhone shaking up the entire billion-unit cell phone industry by shifting competition to Software vs. Hardware... and its critical App Store leveraging a new direct closed-loop relationship with end customers for 1) distribution and 2) billing... that carriers historically fought to never cede."

Relative to Mac product lines and OS X, Chira sees “Apple competing on a plane other than just price, with cuts enough to continue driving incremental share gain," despite average selling prices higher than the averages of competitor PC-makers. Faced with native touchscreen support in Windows 7, Chira continues to doubt that Apple will “sit idly by" given “Apple’s own significant in-house capacitive touch-sensing tech/investments."

UBS: Neutral ($130)

Maynard Um at UBS remains neutral on Apple’s 12-month target, maintained at $130, viewing Apple’s announcements out of WWDC as largely as in-line with expectations.

Um points out that the release of the iPhone 3G S included most of the features expected in a next-generation model. The reduced price of the 8GB iPhone 3G at $99 stands out and “should help stimulate some demand" although “Apple’s subsidy from operators likely remains unchanged, which would likely impact margins."

Snow Leopard’s low price of $29 causes Um to not expect “any material margin benefit" while the updated MacBook and MacBook Pro lines have no impact on his outlook.

Citigroup: Buy/High Risk ($152)

Citigroup’s Richard Gardner maintains a Buy/High Risk rating of Apple shares, maintaining a share price target of $152.

Like some other analysts, Gardner viewed WWDC announcements to align with expectations, though the “biggest surprise from yesterday’s announcements was price cuts across the Aluminum MacBoo notebook line." Though he believes that Apple’s “gross margin achieved a medium-term peak" in the first quarter of 2009, he believes that “Apple remains one of the best ways to play the ongoing digitization of all entertainment content (music, photos and video) because of the company's superior software for managing, editing, and sharing this content."

RBC Capital Markets: Outperform ($165)

Mike Abramsky of RBC reiterated his Outperform rating with a target share price of $165.

Based on a number of factors, including continued innovation in Macs, iPods, iPhones, above-peer margins, growing iPhone global handset share gains, Apple's "VIP" (Valuation Innovation Premium), and Steve Jobs' ongoing involvement in Apple, Abramsky sees Apple attacking “the mass market, expanding iPhone/Mac appeal via innovations and compelling pricing" to merit the Outperform rating.

Morgan Stanley: Overweight ($180)

Morgan Stanley’s Kathryn Huberty maintains her Outperform rating with a share price target of $180.

Although announcements out of WWDC were mostly as expected, Huberty notes that the combination of an earlier ship date and larger price cut for the iPhone and broad Macbook price cuts do present upward pressure" to near-term estimates. In particular, the lowered 8GB iPhone price and new iPhone 3G S should increase demand, with “increasing iPhone build rates in the next few months to provide the next catalyst for AAPL shares."

[ View this article at AppleInsider.com ]

[digitalclips]

Here is hoping for +$200 in 2010

[SpamSandwich]

Originally Posted by digitalclips

Here is hoping for +$200 in 2010

...maybe sooner.

[Bowser]

The Wall St. "Analysts" have repeatedly shown they DO NOT understand Apple's business model or modus operandus... Why the hell should anybody think they know what they're talking about now, when they're saying "buy" when so many times in the past they've been wrong about Apple (saying "sell")? These frauds need to be recognized for the BS pedaling charlatans they are, and then ignored.

I'm reminded of that episode of Arrested Development where one of the characters proclaims himself to have been the world's first combined therapist and analyst; the label he used was 'analrapist'... I think that describes these stupid talking heads extremely accurately.

[spacecadetdavsot]

lol I like the MacBoo line!

[Ireland]

Originally Posted by SpamSandwich

...maybe sooner.

I don't think it will be sooner. It will go crazy around Fed 2010 - a month after tablet is released at CES

[Quadra 610]

Well I should hope so!

[mark2005]

Originally Posted by AppleInsider

Citigroup: Buy/High Risk ($152)
[snip]
Though he believes that Apple’s “gross margin achieved a medium-term peak" in the first quarter of 2009, he believes that “Apple remains one of the best ways to play the ongoing digitization of all entertainment content (music, photos and video) because of the company's superior software for managing, editing, and sharing this content."

That medium-term peak was 36.4%, way above the 33-34.5% range Apple has been in during the last 18 months, and the 26-30% range from 2001-2006. And way above the goal of 30% set by Oppenheimer at a conference call last year.

But Huberty and Abramsky are on-board the AAPL bandwagon. That's mega-scary.

[irnchriz]

Expect the stock to nosedive after the June/July iPhone sales figures come in based on the current prices and useless upgrade path for existing 3G owners in contract.

[quinney]

Originally Posted by AppleInsider

Chira states that “We continue to see Apple’s iPhone shaking up the entire billion-unit cell phone industry by shifting competition to Software vs. Hardware... and its critical App Store leveraging a new direct closed-loop relationship with end customers for 1) distribution and 2) billing... that carriers historically fought to never cede."

Verizon, pay attention if you ever want iPhones on your network.

[quinney]

Originally Posted by mark2005

But Huberty and Abramsky are on-board the AAPL bandwagon. That's mega-scary.

Truly. Based on their past cluelessness, it could be a sell signal.

[peltierzoo]

Do the opposite. Sell! Sell! Sell!

[GTL215]

Originally Posted by Bowser

The Wall St. "Analysts" have repeatedly shown they DO NOT understand Apple's business model or modus operandus... Why the hell should anybody think they know what they're talking about now, when they're saying "buy" when so many times in the past they've been wrong about Apple (saying "sell")? These frauds need to be recognized for the BS pedaling charlatans they are, and then ignored.

i guess you forgot how the price tanked from $200 to $85 last year...the stock is not infallable. AAPL is much more volatile than the average stock, so conservative estimates are always a safer bet. Do you want your broker putting all your money in high risk stocks? As much as you love their products, smart investors must take the emotion OUT of choosing stocks. Of course Apple seems poised to be a great long-term buy, HOWEVER the reality is the short-term is less predictable AND more subject to forces beyond those of Apple themselves. In other words - more stuff affects a stock price than the simple quality of the company, and the analysts have a responsibility to be cautious. I don't see anybody on this board making a living from predicting stocks, so let's leave that job to the experts.

[Dr Millmoss]

Originally Posted by mark2005

That medium-term peak was 36.4%, way above the 33-34.5% range Apple has been in during the last 18 months, and the 26-30% range from 2001-2006. And way above the goal of 30% set by Oppenheimer at a conference call last year.

But Huberty and Abramsky are on-board the AAPL bandwagon. That's mega-scary.

Good comments on margins. I've said it before, and I'll say it again: Apple is not going to sacrifice margins. The analysts who worry about that are not paying attention to Apple's history.

Originally Posted by irnchriz

Expect the stock to nosedive after the June/July iPhone sales figures come in based on the current prices and useless upgrade path for existing 3G owners in contract.

Sell short. Then be sure get back to us in a couple of months with how well your prediction paid off.

[Spamboy]

Originally Posted by irnchriz

Expect the stock to nosedive after the June/July iPhone sales figures come in based on the current prices and useless upgrade path for existing 3G owners in contract.

My guess is Apple/AT&T will reduce the price by $100 for 3G owners, saying that they've fulfilled half of their contract. If they had said $100 more for the start, people would have been upset, but if they cut it down TO $100 more, it'll make everyone really happy.

Anyhow, these people setting prices....Citigroup? Um, fellas, you think any of you have any real credibility anymore? So, where did your own stock go? From 54 down to 3? Ummmmm.... Yeah.... We'll believe you.

[aderutter]

Well I'm planning on upgrading. and I know a few people that last year thought the iphone was very expensive who this year cannot resist and are going to buy as soon as they can. From where I stand the future's looking great

[melgross]

Originally Posted by Bowser

The Wall St. "Analysts" have repeatedly shown they DO NOT understand Apple's business model or modus operandus... Why the hell should anybody think they know what they're talking about now, when they're saying "buy" when so many times in the past they've been wrong about Apple (saying "sell")? These frauds need to be recognized for the BS pedaling charlatans they are, and then ignored.

I'm reminded of that episode of Arrested Development where one of the characters proclaims himself to have been the world's first combined therapist and analyst; the label he used was 'analrapist'... I think that describes these stupid talking heads extremely accurately.

So you think that Apple's price won't rise in the next 6 months or a year? It will remain where it is now or drop further?

This is assuming that the economy doesn't take another major fall, as that would knock everyone's figures for a loop.

[melgross]

Originally Posted by mark2005

That medium-term peak was 36.4%, way above the 33-34.5% range Apple has been in during the last 18 months, and the 26-30% range from 2001-2006. And way above the goal of 30% set by Oppenheimer at a conference call last year.

But Huberty and Abramsky are on-board the AAPL bandwagon. That's mega-scary.

It's interesting though that Apple has been predicting margins well below the actual numbers for quite a while now. In fact, as they had been predicting drops in margins, they have gone up. This was even before the economic problems that some of us were saying existed at the beginning of 2008, when we were saying that we were in the beginning of a recession (though we were soundly knocked down for saying that then).

[MJ Web]

"Morgan Stanley’s Kathryn Huberty maintains her Outperform rating with a share price target of $180."
When did this moronic charlatan switch from "Sell" at $80 to "Outperform" at $180. Kathryn Huberty is a fraud!

[quinney]

Originally Posted by MJ Web

"Morgan Stanley’s Kathryn Huberty maintains her Outperform rating with a share price target of $180."
When did this moronic charlatan switch from "Sell" at $80 to "Outperform" at $180. Kathryn Huberty is a fraud!

May 25, 2009: http://www.reuters.com/article/COMSR...090526?sp=true

She missed all of AAPL's move up. This example should be instructive to those who advocate
trusting "experts".

[ncee]

Originally Posted by SpamSandwich

...maybe sooner.

As long as a leader is still around, and gets back into public view - $200+ will happen this year

If … ???

Skip

[Haggar]

It's impossible to be both an Apple customer and a shareholder. First they complain that Apple's prices are too high for customers. But when Apple lowers prices for customers, then they complain about reduced margins and revenues driving down stocks.

[SpamSandwich]

Originally Posted by quinney

Truly. Based on their past cluelessness, it could be a sell signal.

Moof!

[SpamSandwich]

Originally Posted by quinney

May 25, 2009: http://www.reuters.com/article/COMSR...090526?sp=true

She missed all of AAPL's move up. This example should be instructive to those who advocate
trusting "experts".

So, the question now is... whose homework has she been copying?

[SpamSandwich]

Originally Posted by melgross

It's interesting though that Apple has been predicting margins well below the actual numbers for quite a while now. In fact, as they had been predicting drops in margins, they have gone up. This was even before the economic problems that some of us were saying existed at the beginning of 2008, when we were saying that we were in the beginning of a recession (though we were soundly knocked down for saying that then).

Mel, what's your opinion on near-to-medium-term economic conditions? Are you in the 'hyperinflation' camp? I'm very concerned with the currency flooding our economy right now and personally believe we could again be looking at 1970's level inflation.

[aaarrrgggh]

I think the analysts are finally catching up in a reasonable way; the business practices for Apple are fairly well established in their current markets and basing future returns on past experience is reasonable for the moment. When Apple releases the next game-changer, it will take analysts some time to get on board with the dramatic shifts again.

As for the whole subsidized phone thing... there isn't much room for AT&T to further subsidize. Recall their Q3 08 earnings call, and the impact that iPhone subsidies had on their bottom line. They aren't going to push that hard right now, but rather wait until the initial rush has been satisfied and cave after that. By all accounts, they have another winner on their hands and why wouldn't they try and milk it for all it is worth?!

For myself though, I'm taking some of the Apple stock off the table on the next rally, and I am not buying a new iPhone until I can get it unlocked for international travel and subsidized by AT&T. If I can't get that, then I will ditch the smart phones altogether for a while. As someone who uses my iPhone a lot, I can't justify owning a smartphone that needs to just get switched off when I travel, so my phone bill isn't bigger than my rent...

[quinney]

Originally Posted by SpamSandwich

Moof!

is that you, Clarus?

[SpamSandwich]

Originally Posted by quinney

is that you, Clarus?

Ah, someone still remembers!

[SpamSandwich]

Originally Posted by aaarrrgggh

For myself though, I'm taking some of the Apple stock off the table on the next rally, and I am not buying a new iPhone until I can get it unlocked for international travel and subsidized by AT&T. If I can't get that, then I will ditch the smart phones altogether for a while. As someone who uses my iPhone a lot, I can't justify owning a smartphone that needs to just get switched off when I travel, so my phone bill isn't bigger than my rent...

Guess if AAPL hits $200 again (or comes closer to it) I'll sell my entire lot of AAPL... this market is killin' me.

[Constable Odo]

Why hasn't there been any ChiPhone announcements. I'd seen an article stating that Apple was going to bring the iPhone to China Unicom once their 3G network had been rolled out in May. I'd seen reference to this in some China news and really believed this was a done deal. Plus the fact that Foxconn was writing some apps for the iPhone so it could be used over there right away.

I guess somebody jumped the gun in making the announcement on the China Unicom site. Those Chinese carriers must be hard people to bargain with considering the U.S. is giving the Chinese a number of manufacturing contracts.

I have my doubts that the iPhone is going sell all that well in China if it's carrier fees are too high for people to afford. If people are complaining in the U.S. then I guess it'll be worse in China. I'll just have to wait and see.

[melgross]

Originally Posted by Haggar

It's impossible to be both an Apple customer and a shareholder. First they complain that Apple's prices are too high for customers. But when Apple lowers prices for customers, then they complain about reduced margins and revenues driving down stocks.

I don't.

[melgross]

Originally Posted by SpamSandwich

Mel, what's your opinion on near-to-medium-term economic conditions? Are you in the 'hyperinflation' camp? I'm very concerned with the currency flooding our economy right now and personally believe we could again be looking at 1970's level inflation.

In the 70's we had "stagflation". That was very much because of the oil embargo and the subsequent raising of oil prices by 400% in a short time. That was hard to get out of. The economy needed time to adjust. We also had just gotten out of Vietnam which cost a good deal of money also, and was a cause of some inflation.. Then right before the end of the decade, we had the Iran crisis which shook our confidence, and prolonged the recession.

That was several shocks one after the other. Very unusual.

Today, it's different. We're caught in a mess, but I think that we'll slog our way out by 2010 sometime, hopefully by the end of the first quarter. but it will take almost another year until we're growing to any extent again.

Plus, after most recessions, there's an aftershock that lasts for about 3 months. Exactly when that will happen depends on how we come out of it. If we come out slowly, we'll likely drop back a bit like that. If we come out like gangbusters, we may miss it entirely.

[PXT]

Price cuts are the only thing these so-called analysts can understand. So they are happy today.

[Dr Millmoss]

Originally Posted by melgross

I don't.

Neither do I. We're doing the impossible!