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Barclays downgrades rating on Apple stock due to maturing smartphone market, tells investors to...

post #1 of 96
Thread Starter 
Shares of Apple stock slid Thursday morning after investment firm Barclays Capital lowered its rating on shares of the iPhone maker, saying it doesn't expect the stock to break out of its current trading range within the next year, and suggesting its performance could become comparable to that of rival Microsoft.

Barclays


Analyst Ben A. Reitzes issued a note to investors, provided to AppleInsider, in which he advised them to "step aside," citing a maturing smartphone market that he believes presents limited future growth potential for Apple's iPhone. And without a new "revolutionary" product, he doesn't believe shares of Apple will see a boost anytime soon.

"Frankly, we just couldn't quite bring ourselves to use smart watches or TVs as reasons to raise numbers -- nor were we fully convinced that these products could move the needle like new categories did in the old days," Reitzes wrote on Thursday.

The analyst said that as an iPhone user, he's "very excited" about some of the company's new products in the pipeline, with potential innovations in mobile payments, geolocation, and wearable devices. But as an investor, he doesn't see Apple introducing anything as groundbreaking from a financial perspective as the iPhone or iPad.

"We believe Apple's story is all about iPhones and 'new categories' seem to be designed to make the iPhone more useful --?but don't necessarily reaccelerate growth in the iPhone category to sustainable double-digit levels," he wrote. "If we were to see evidence that payments and/or new content deals enhance the Web services aspect of Apple vs. Google and others long-term, we may need to reassess this opinion."

Reitzes then went on to cite the valuation of Apple's rival Microsoft from 2000 to 2010, and suggested that Apple might see a similar pattern. The analyst said that he sees "no precedent" that large tech companies can broadly outperform once again after "a tough year or two."

Barclays


In his eyes, the "law of large numbers" may have caught up with Apple, and the company's gross margins may have peaked.

"As a result, there doesn't seem to be anything wrong with saying shares could be range-bound as we move from product cycle to product cycle until we can see Apple creating entirely new markets in the cloud," he said.

Accordingly, Barclays has downgraded Apple from an "overweight" rating to "equal weight," with a continued "neutral" outlook for the company. The firm's price target for shares of AAPL is $570, or about $35 higher than where it is trading as of Thursday morning.
post #2 of 96

yes coming from the company which paid big fines for being caught manipulating interest rates so they can rip off consumers.

post #3 of 96

I think Apple knew this.  Anticipated it.  I would think there are other plans and will be revealed in 2014 or 15.  We will see.

An Apple man since 1977
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An Apple man since 1977
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post #4 of 96
Brave words that will be eaten by Mr. Reitzes shortly.
post #5 of 96
Fact is, he could be right. Not that this is bad. The company has matured. Until there is evidence of something new, they will just be this predictably stable successful company.

We put too much weight on what Wall Street says as a whole.
post #6 of 96

Yet another anal-y-sis 

 

I think there is something that report overlooked, the actual hardware account for a fraction of Apple revenu.  Apple is makings a lot more money selling digital media and apps than selling iOS or Mac hardware. 

post #7 of 96
Why does AI publish this garbage....the same garbage that gets trotted out on Business Insider for page views. Ooh someone compared Apple to Microsoft, quick throw up an article because we know it will get lots of clicks and will be great for trolling. 1rolleyes.gif
post #8 of 96
Barclay's: true visionaries. /s

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #9 of 96
Quote:
Originally Posted by 512ke View Post

Brave words that will be eaten by Mr. Reitzes shortly.

Meh. They just issue another press release.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #10 of 96

Reading other articles mentioning this and the WhatsApp acquisition came up. Facebook is a one trick pony, Google is as well (only really sells ads, the rest doesn't make them any money), Microsoft is done so why do all these idiot investment firms only see Apple in the same light? They have a lot more than just the iPhone and all of the other areas make money. What happens when people don't want to use Facebook anymore? Will Barclays downgrade them? Probably not. 

 

@starbird73 "We put too much weight on what Wall Street says as a whole." You are absolutely correct and I'm past being tired of all the garbage these worthless people spew out of their uneducated mouths.

post #11 of 96

Additional stock buyback in 3... 2... 1...

  Google Maps: ("Directions may be inaccurate, incomplete, dangerous, or prohibited.")

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

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  Google Maps: ("Directions may be inaccurate, incomplete, dangerous, or prohibited.")

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

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post #12 of 96
Translation: Apple hasn't made enough billion dollar acquisitions to bluff the market into thinking that they've bought their way into a dynamic new field of growth. C'mon, Apple, throw Barclay's analysts a bone and light a few billion on fire for some robots, or thermostats, or social apps.
post #13 of 96
Translation: "I'm going to manipulate AAPL stock downwards so I can buy more at a discount."
post #14 of 96
Quote:
Originally Posted by AppleInsider View Post

Analyst Ben A. Reitzes issued a note to investors, provided to AppleInsider, in which he advised them to "step aside," citing a maturing smartphone market that he believes presents limited future growth potential for Apple's iPhone.

Quote:
If you see me comin', better step aside
A lotta men didn't, a lotta men died
One fist of iron, the other of steel
If the right one don't a-get you
Then the lef' one will


Apologies to Tennessee Ernie Ford
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
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"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
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post #15 of 96

Been reading this board for several years but first time post.   Yeah, I am a share holder.  I have to laugh to the responses here when investment firms downgrade APPL,   Face it folks, until Apple develops new products the stock is range bound.  I think we have been fortunate it has stayed above $500.  Apple is a growth company and until there are signs of growth, no buy back, dividend increase, etc., is going to really move the valuation or the stock price.  Its the way of the market.   I own a few shares of Tesla, unfortunately not enough, and it announced it is going to sell an additional 3-5,000 cars next year and the stock price doubled.   makes no sense, but that is the way it is....

post #16 of 96

Well even if Apple's business stays at zero growth, they could still buy back half of their remaining shares in 5 - 10 years, depending on repatriation tax implications or issuing debt.  If you assume their P/E stays the same (and there really isn't any room for it to go lower) then that would result in a doubling of the share price for that reason alone.  Now before anyone starts pointing out that buybacks didn't work out so well for company X, please note that all such companies began with large P/Es that needed to come down to match their level of low - or no - growth.

 

Thompson


Edited by thompr - 2/20/14 at 10:44am
post #17 of 96

He's just trying to manipulate the market so he can buy up shares at lower prices.  Then he will pump up the market and dump apple like a two-bit hooker.  It is simple to do with a company like Apple.

 

He should go to jail.

post #18 of 96
Ben should check the Price to Earnings multiple of MSFT circa 1999-2000 vs the PE of AAPL at its supposed pseudo-peak in 2012. MSFT was about 60. At an equivalent PE at its peak, Apple would be range bound for the next decade at a share price of $2000 - $2400. In which case, Mr. Reitzes analysis might have some validity. As it stands, he should probably be fired or sent back to sixth grade since his education seems to be range bound at about that level.
post #19 of 96
With Facebook having some 1.2B users, wouldn't that market me saturated as well? Why hasn't their stock been down rated¿
"See her this weekend. You hit it off, come Turkey Day, maybe you can stuff her."
- Roger Sterling
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"See her this weekend. You hit it off, come Turkey Day, maybe you can stuff her."
- Roger Sterling
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post #20 of 96
Quote:
Originally Posted by starbird73 View Post

We put too much weight on what Wall Street says as a whole.

 

It's more fundamental than that: the entire concept of the stock market is based on investing in something with huge growth potential.  There's no value placed on a stable, successful company with huge profits (at least, not anymore).  All of the value is placed on growth potential.

 

Which is great for startups, but not so great for established companies like Apple.  So I think it makes sense for them to just buy back the vast majority of the stock and avoid the distraction of voices which have no real vision which is relevant to the current reality of Apple.

 
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post #21 of 96
Quote:
Originally Posted by auxio View Post

It's more fundamental than that: the entire concept of the stock market is based on investing in something with huge growth potential.  There's no value placed on a stable, successful company with huge profits (at least, not anymore).  All of the value is placed on growth potential.

Which is great for startups, but not so great for established companies like Apple.  So I think it makes sense for them to just buy back the vast majority of the stock and avoid the distraction of voices which have no real vision which is relevant to the current reality of Apple.

Agreed!
post #22 of 96
Quote:
Originally Posted by BigMac2 View Post
 

Yet another anal-y-sis 

 

I think there is something that report overlooked, the actual hardware account for a fraction of Apple revenu.  Apple is makings a lot more money selling digital media and apps than selling iOS or Mac hardware

 

Simply not true. If this is your analysis, you have little business criticising others'.

 

Not much wrong with the article apart from the comparison to MicroSoft. Apple has the premium end of the market sewn up with iPhone/iPad, and shows no serious inclination to go after the sectors which are growing. (Hey, we'll build a cheaper plastic iPhone and ... still charge a premium price for it.)

 

Of course Apple could spring on us a whole new category of devices, but I can't imagine it. The iPhone/iOS was brilliantly executed, but smartphones were in existence before the iPhone, and tablets before the iPad, just a world apart in usability. There may be a market for an iWatch, but I can't see this being as big as, or as profitable per device as the iPhone. Anyway, I want fewer gadgets, not another one.

 

They're not saying "Apple is doomed". It should grow solidly. But it's going to take something special, different, to regain the meteoric growth levels. Non story.

post #23 of 96
Somehow I dont see analysts stating anything about the law of large numbers as a limitation for Google - now at market cap of 403B - just for Apple at 475B.
post #24 of 96
Originally Posted by PhilBoogie View Post
With Facebook having some 1.2B users, wouldn't that market me saturated as well? Why hasn't their stock been down rated¿


That would apply if the users were the end game for Facebook. 


But Facebook has an ever-increasing amount of personal information that it can whore out to everyone and his mother in law, so they’ll keep growing.

Originally Posted by asdasd

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Originally Posted by asdasd

This is Appleinsider. It's all there for you but we can't do it for you.
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post #25 of 96

Funny Barclays.

 

Look here they have 337,820 in Bearish options. (look at bearish Option trades table)

 

http://tech.fortune.cnn.com/2014/02/18/apple-hedge-whale-wisdom/

 

Ridiculous that they have a massive Bear position and then they release a massive bearish analysis note.

post #26 of 96
Quote:
Originally Posted by EMessi View Post

Somehow I dont see analysts stating anything about the law of large numbers as a limitation for Google - now at market cap of 403B - just for Apple at 475B.

 

Fact is there is more institutional money in Google right now $335 billion (83% institutional ownership) than Apple  $295 billion (62%)

 

Barclays has a massive position in Bearish options by the way...........

 

http://tech.fortune.cnn.com/2014/02/18/apple-hedge-whale-wisdom/

post #27 of 96

Comparing Apples stock price from 2011 to present to Microsoft's stock price during the 1999/2000 tech bubble?

 

how ridiculous can you get.

post #28 of 96

A trip down memory lane to Dec 2008 yields:

GS downgrades Apple, says new product at Macworld unlikely

 Shares of Apple slipped about 4 percent Monday after investment bank Goldman Sachs removed the company from its buy list for the first time in more than two years, citing concerns over consumer spending and a belief that Macworld Expo will not see the company embark on a major new product initiative.
 The Goldman Sachs analyst downgraded shares of Apple to Neutral from Buy for the first time since July 20, 2006. He also trimmed his calendar year 2009 per-share earnings estimate to $4.75 from $5.13 and cut his 12-month price target on the stock to $115 from $125.

 

This analyst's 12 month target price?  $115

Apple's actual price Dec 2009?  $195

 

Some analysis...

post #29 of 96
Analyst re-ratings always come AFTER the stock tanks... then it dips a bit further, someone buys a shitload (plus some apple buybacks) and rides it back to the top... then the same analysts updates their views with a sudden positive bias... and they unload their shares... in a very predictable pattern. Instead of crying about it, small investors should learn to exploit it. Accumulate shares once analysts starts seeing dark clouds everywhere, and sell again when they become euphoric. It's really that simple. When you have listened to them long enough, you learn that they are actually very consistently wrong - or dare i say manipulative. Analysts have ZERO interest in "educating" the public, they are entertaining their own agenda entirely.
post #30 of 96

Investors have been stepping aside from Apple since the infamous share price fiasco in 2012 when Apple handed over the smartphone market to Samsung.  There's probably no recovery from that.  It definitely left Wall Street and Apple shareholders with a bitter taste in their mouths.  Most successful companies with wads of cash don't give their market share position away that easily.  Even after this recent buyback Apple shares are still stuttering and misfiring like some ancient engine with bad plugs and fouled carbs.  Everything Apple does is like pouring sugar into a gas tank and the share price tanks.  Meanwhile, Google is running like a world-class F1 racer leaving Apple sucking fumes.

 

Apple really should have gone after Tesla to show that it means business.  Every time Apple's share price moves up a bit, an analyst or two will jump in and say Apple has gone up TOO much and downgrade the stock.  Apple's iPhone and tablet business has been completely overwhelmed by half-priced Android devices.  Most consumers simply can't resist really cheap devices because they think they're getting a bargain.  I'm not sure whether Apple deserves a downgrade or not but I always expect it to happen.  The stock has no momentum whatsoever.  It will move up and bit and then boom, analyst downgrade and share collapse.  It's really a pain to be an Apple shareholder nowadays while the rest of the market is on a roll.  At least I can count on the dividends to see me through.  Apple refuses to play Wall Street's game and would rather sit on a mountain of cash than excite Wall Street investors.  That's the breaks.  Apple can't seem to increase institutional ownership which pretty much shows Apple has stagnated.

post #31 of 96
Oh please, maturing smartphone market... Its not a real thing.
post #32 of 96
Originally Posted by TNSF View Post
Oh please, maturing smartphone market... Its not a real thing.

 

Well, it is. Eventually there comes a point where there isn’t a new audience for your product. 

It happened with the telephone, then the radio, then the television.

 

Thing is, it hasn’t even happened with the computer yet. And it won’t happen with the cell phone for quite some time, either.

 

And even when it does happen, that doesn’t mean the market is dead. Previous owners will always be buying new products of that category. Any fear in this regard is borne of idiocy.

Originally Posted by asdasd

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Originally Posted by asdasd

This is Appleinsider. It's all there for you but we can't do it for you.
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post #33 of 96
Doomed
post #34 of 96
Someone said: "I think there is something that report overlooked, the actual hardware account for a fraction of Apple revenu. Apple is makings a lot more money selling digital media and apps than selling iOS or Mac hardware".

Actually that's not true - Apple makes the vast majority of it's profits from selling hardware. It's not making 'a lot more money' selling digital media and apps. Where are you getting this information from?
post #35 of 96
They called it right
Apple needs a new product line very soon.
post #36 of 96
Quote:
Originally Posted by pazuzu View Post

They called it right
Apple needs a new product line very soon.
And they just figured this out today? This meme has been said for a year plus now. Why is this one any different than the others, except that someone might have an interest in driving the share price down today.
post #37 of 96
Classic rigged casino move. When the Barclay's clients sell, who do you think is buying?
post #38 of 96
I can't speak to the "current range" or specific time frames, and I'm sure Apple will be a success for a very long time to come--both in terms of income and user satisfaction (the latter meaning the most to me). They'll also have some big product hits and some "flops" (just like under Jobs--although an Apple hardware "flop" is a success most companies would kill to have).

BUT... I'm certain that Apple's iPhone-spurred profit growth will never be repeated. Smartphones, as re-invented by Apple, are in a unique position to be a fairly pricey product that almost everyone on Earth could potentially use. (Cars could be similar, except limited to a smaller number of buyers and kept running much longer. And lots of cheap products like toothbrushes count... but have little profit.)

I don't think anyone--not Apple, not anyone--will ever invent a product that is as WIDELY desired as a smartphone, AND costs as much. A watch? A TV? Health tracker? In-car systems? Smaller markets, smaller price tags. They could be successes, but none like the iPhone. Tablets? Yes, as they replace computers for most people (gradually) that's pretty big--but still not as big as smartphones. More people will have their own personal phone than their own personal tablet. Apple can hold onto the huge market they created (high-end modern smartphones), and that's terrific, but that market can't grow forever and no other product can have the same kind of market. I just don't see it (and that's fine by me).

So the stock SHOULD reflect that Apple's done something that can't be repeated. Which is why I don't consider stock price a measure of success as much as it is a measure of the market's craziness (and the influence of PR/press/manipulation). But even a purely sane, fair stock price wouldn't rise forever.

What price would reflect that reality? I don't know--probably higher than it is! I think people have underestimated Apple for a long time (or pretended to). But whatever the fair price may be, it can't rise forever at the same rate the iPhone caused. (And for the record, I don't think the iPhone growth is anywhere near over yet--even if Apple stays away from the profit-free bottom end. And the iPad growth is just beginning.)
post #39 of 96
Quote:
Originally Posted by TNSF View Post

Oh please, maturing smartphone market... Its not a real thing.

Samsung thinks the smart phone market is a maturing market because they can't sell shit to idiots after spending billions on marketing. Meanwhile Apple just booked their best quarter ever and see a lot of future in the iPhone market.

Apple is positioning their iDevices for being able to do much more then currently imagined. When that becomes obvious during this year, their stock will soar...
post #40 of 96
I don't normally agree with Rocco Pendola but he makes sense here. Somehow I have a feeling Apple will get the last laugh....all the way to the bank.

www.thestreet.com/story/12425384/1/buy-apple-because-it-does-not-participate-in-silicon-valleys-insanity.html?puc=yahoo&cm_ven=YAHOO#comment-1253531005
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