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Investors advised to own Apple stock ahead of June quarter earnings

post #1 of 24
Thread Starter 
With Apple's quarterly earnings report just over a week away, one prominent analyst is recommending that investors buy in before the stock rockets to $910.

Gene Munster with Piper Jaffray issued a note to investors on Monday in which he said he believes Apple will report sales of between 28 million and 29 million iPhones for its June quarter. That's slightly higher than Wall Street consensus of between 25 million and 27 million.

"We believe investors should own AAPL going into the June quarter earnings as we expect the company to report iPhone units better than low expectations of the buy side," Munster wrote.

The analyst said he is "confident" that iPhone sales could be better than Wall Street expectations, particularly given what he referred to as "sustained weakness" at rivals Research in Motion and Nokia. Piper Jaffray's price target for AAPL remains at $910.

But in what he called the "bigger picture," Munster doesn't think the June iPhone number will matter all that much. He thinks investor expectations for the current quarter concluding in September will be "reset" ahead of the anticipated debut of a new iPhone model in October.

"We expect a more conservative guide than usual because of our belief that the iPhone 5 will launch in October, while the Street has mixed expectations in terms of pricing," he said. Munster's iPhone sales projection for the September quarter was reduced accordingly from 26 million to 24 million.

Piper


As for the iPad, he believes Apple will report sales of 16 million units, which is roughly in line with Wall Street expectations. The iPhone is expected to account for about half of Apple's sales, while the iPad will represent 24 percent.

However, Munster cautioned that the iPad is the "toughest of the three product lines" to predict, given how new the tablet market is and how thoroughly Apple controls it. But he feels comfortable forecasting that sales to have grown 73 percent year over year, which would represent a "meaningful step-down from previous iPad growth rates."

"We note that iPad units have been up an average of 153% [year over year] over the past four quarters," he said. "We note that iPads have remained in stock over the past several weeks on the Apple Store, suggesting supply is meeting demand."

Munster's iPad projection is lower than analyst Charlie Wolf with Needham & Company, who forecast last week that Apple sold 20 million units in its June quarter. Both analysts have largely similar predictions for iPhone sales, however, as Wolf believes Apple will report 28 million units.

Apple will report earnings for its third fiscal quarter of 2012 during a conference call on Tuesday, July 24, at 2 p.m. Pacific, 5 p.m. Eastern. AppleInsider will have full, live coverage of the call.
post #2 of 24
The lead paragraph makes Munster seem like a race track tout. He's not. Having a price target of $910 in no way implies that it will "rocket" to that number.

Using the word "rocket" is editorializing on the part of the AppleInsider writer, because Munster never made any such claim. It's just plain bad journalism.
Edited by Kibitzer - 7/16/12 at 6:21am

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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post #3 of 24

$910?  Is he sure it won't *rocket* to $920 or, $915, or $900?

post #4 of 24

I hope this is not another trap set by big investors to lure us buy.
 

post #5 of 24

Rockets to $910?!  That Munster is one hyper dude.  You just can't trust these analysts.  Many analysts are pumping Apple endlessly and the share price just sits at around $600 like a lump of wet oatmeal.  The hedge funds control Apple and they aren't going to just sit back and let Apple climb out of their controlling grasp.  They'll claim jobs data or Eurozone meltdown is what's holding Apple back while Apple is pulling in truckloads of cash.  Apple's share price will continue to stay disconnected from revenue, so no matter how much Apple makes, the share price won't move very much.  A bomb can't make Apple's stock jump in this economy.  Get into Apple before it runs up to $650, but don't expect much more than that.

post #6 of 24
The big news will be iPad sales. Given the new iPad only had a couple of days in the last quarter and Cook and Co. have been expanding the international delivery of the new iPad out faster than almost any other iProduct, expect the iPad to blow the water out of current estimates (thinking 22-26 million units.).
post #7 of 24
Quote:
Originally Posted by raymondinperth View Post

I hope this is not another trap set by big investors to lure us buy.
 

Munster isn't an Analyst I would associate with that kind of behavior. However I do understand your point,and as usual, a degree of caution usually pays off.

post #8 of 24
Quote:
Originally Posted by Steven N. View Post

The big news will be iPad sales. Given the new iPad only had a couple of days in the last quarter and Cook and Co. have been expanding the international delivery of the new iPad out faster than almost any other iProduct, expect the iPad to blow the water out of current estimates (thinking 22-26 million units.).

 

The new iPad does have lower margins than the iPad2, so they need to compensate in numbers, but no one knows yet if the numbers are so high it compensates enough.

post #9 of 24
If I were buying, I would buy just *after* the announcements. At that point, Apple stock goes down a lot more often than not, generally attributed to profit taking.
post #10 of 24
Quote:
Originally Posted by JeffDM View Post

If I were buying, I would buy just *after* the announcements. At that point, Apple stock goes down a lot more often than not, generally attributed to profit taking.

Reminds me of that old Wall Street adage, "buy on the rumor, sell on the news."
post #11 of 24
Quote:
Originally Posted by JeffDM View Post

If I were buying, I would buy just *after* the announcements. At that point, Apple stock goes down a lot more often than not, generally attributed to profit taking.

Sadly that is the pattern for these many years ... but then after a week or so it usually climbs higher than the previous high point. Not that I'll complain if this analyst is correct this time. /fingers crossed
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
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post #12 of 24

yes, Apple tends to go down after earnings. but that is because it typically has a big runup heading into earnings. but note that in the January quarter, Apple gapped up from $421 close and never came back down. within a few weeks it was over $500 and all the self-styled experts who were insisting on a retrace missed the move and left huge money on the table.

post #13 of 24

point.jpg

Smoke me a kipper. I'll be back for breakfast.
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Smoke me a kipper. I'll be back for breakfast.
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post #14 of 24

All the analysts said this last time and the share price is still below what it was in February.

 

I don't think the fund managers who actually buy the stock believe that Apple can keep posting blow out numbers every quarter in the middle of a worldwide recession and with increasing competition, which is why I think the share price will probably go up for a few days and then gradually come back down again as people profit take.

 

I predicted that the share price would remain flat or decline last time and was roundly criticised by the know-it-all mafia on here (you know who you are), non of whom have the guts to admit they were wrong and I was right.

 

Let's see what happens this time.

post #15 of 24

"he is "confident" that iPhone sales could be better than Wall Street expectations"

 

could be better?  Yeah that's real confident. ;)  btw, I don't see in this article where Munster says it will "rocket to $910"...only the title says that.  Price targets are usually ~12 months out.  

 

If you believe in Apple's continued run of sales with high profit margins, own the stock.  I will say i'm amazed at how the stock isn't higher given it's track record, fundamentals (cash pile, profit margins, low p/e) and future growth.

post #16 of 24
Quote:
Originally Posted by GTR View Post

point.jpg

Very cool.  You got a photo of Steve Jobs back in 1998!

post #17 of 24

the only difference between this and last quarter is that all these analysts said basically the same things on a different date. 

 

I pity any investor that hasn't been paying enough attention to notice this for him/herself and invest accordingly

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #18 of 24

If you can afford AAPL it's a no-brainer stock.

 

AAPL has the lowest P/E of any of the major tech stocks, and that ratio continues to decline quarter after quarter.

 

If they exceed market expectations again, I would expect it to hit $700 by the time the next quarterly report comes out… 

 

And, if we are going to see both an "iPad Mini" and "iPhone 5" in the next few months (and possibly even a new iMac bump), then we're poised for $750 by year-end, if not a tad more...

 

If they kill the holiday quarter again like they did last year, then yes, I think this $900 price is totally realistic.

 

That's my prediction… :)

post #19 of 24

Apple will not "rocket" up if they only meet expectation, they need a blowout. 

 

on the other hand, if they blowout again it will be 2 in a row with the stock price around 600$, that means serious PE compression. At some point the stock PE will uncompress and the stock will rise all of the sudden.

 

Apple is suppose to announce the dividends X dates on the call, along with the final dividend ratio.  If there is any suprise there that could lead the stock up.

 

Here are the earings numbers prediction made by user White_Knight_in_Texas on the finance forums:

 

 

APPLE "BEATS" their own Company Guidance consistently as follows:

2010 Q1 Guidance = $4.80; Actual = $6.43;(Beat=40.0%)
2011 Q2 Guidance = $4.90; Actual = $6.40; (Beat=30.6%)
2011 Q3 Guidance = $5.07; Actual = $7.79; (Beat=53.6%)
2011 Q4 Guidance = $5.50; Actual = $7.05 (Beat=28.2%)
2012 Q1 Guidance = $9.30; Actual = $13.87 (Beat=49.1%)
2012 Q2 Guidance = $8.50; Actual = $12.30 (Beat=44.7%)

Given: APPLE’s EPS Company Guidance is $8.68 for This Quarter ( Fiscal Q3 Ending June 30, 2012) – to be reported July 24, 2012.

If APPLE “beats” their Guidance by only 30% (Equating to an actual EPS of $11.28), then TTM EPS = $44.55…

15 PE = $668.25/sh.;
16 PE = $712.80/sh.;
17 PE = $757.35/sh.;
18 PE = $801.90/sh.;
19 PE = $846.45/sh.;
20 PE = $891.00/sh.


Edited by herbapou - 7/16/12 at 9:46am
post #20 of 24

Apple always surprises with better margins than Street estimates.  It negotiates for better and better pricing, so what it paid "yesterday" shouldn't be rolled 1:1 into forecasts.

post #21 of 24
Quote:
Originally Posted by monstrosity View Post

Munster isn't an Analyst I would associate with that kind of behavior. However I do understand your point,and as usual, a degree of caution usually pays off.

Double that sentiment. I've been in AAPL since 2008 and Gene Munster is usually right on the money. 

post #22 of 24

Um, gee what about the good old ipad 2's sales.....?..  Duh.  I'm sure they've been great given the price point, heck I bought my 90 year old uncle a ipad 3 and my 87 year old Aunt one,  so that's two....lol

post #23 of 24
Quote:
Originally Posted by Constable Odo View Post

Get into Apple before it runs up to $650, but don't expect much more than that.

 

Why $650?  What's so special about this point that makes it unlikely it will go much higher?  It wouldn't have anything to do with the all time high of $644, now would it?  Cause yow know, stocks don't go much higher than their all time highs, right? wink.gif

 

 

Quote:
A bomb can't make Apple's stock jump in this economy.  

 

Which economy?  The same economy which made it go from $79 to $600?

 

Quote:
Apple's share price will continue to stay disconnected from revenue, so no matter how much Apple makes, the share price won't move very much.

 

AAPL does tend to stick to a particular price point for a long time, seemingly defying earnings - but then eventually it does jump and correct itself.  Also P/E tends to contract over time, but now with a dividend, it should be tied much more to the earnings than it has been in the past.

 

Quote:
The hedge funds control Apple and they aren't going to just sit back and let Apple climb out of their controlling grasp.  They'll claim jobs data or Eurozone meltdown is what's holding Apple back while Apple is pulling in truckloads of cash.

 

Why would hedge funds not allow it to go up?  Why would they not want to take advantage of the run up?  I understand if they may be trying to drag it down so that they themselves can get back in at more attractive levels, but saying that anyone would be deliberately hold the stock down (if they even had the power to do so) just doesn't make any sense, unless they all were shorting AAPL and I can't imagine there's still enough AAPL shorts that are still wearing their ... shorts!

 

 

Quote:
Rockets to $910?!  That Munster is one hyper dude.  You just can't trust these analysts.  Many analysts are pumping Apple endlessly and the share price just sits at around $600 like a lump of wet oatmeal.  

 

They're not saying it will go to $900 immediately, just by this time next year.  These predictions aren't meant to be trusted either, they're just an educated guess based on several assumptions (their sales estimates are correct, the economy won't get much worse in the meantime, etc.).  It is of course no guarantee of anything, but predictions based on a hunch are certainly no better.

post #24 of 24

Munster is the man. By far one of the better AAPL "Analysts" to listen to if you're going to with any. He's usually spot on.... i.e he knows a winner when he sees one, doesn't let human politics muddle his views, and knows the obvious: AAPL is a fundamental easy pick, and is heading way up.

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