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Analyst warns of stock volatility around Apple earnings

post #1 of 25
Thread Starter 
After surging for the past several weeks, shares of iPhone maker Apple Inc. could experience some short-term volatility around the company's fiscal third quarter earnings report this Wednesday, warns one Wall Street analyst.

"We believe buy-side investors have more or less figured over the past 18 months that Apple sell-side estimates tend to be overzealous and sometimes outright irrational," American Technology Research analyst Shaw Wu wrote in note to clients Monday. "Regardless, we advise investors to take advantage should Apple shares pull back on short-term concerns."

Like many fellow analysts, Wu expects the Cupertino-based company to report revenue and per-share earnings well above its guidance of $5.1 billion and $0.66. Specifically, he's modeling for earnings of $0.73 cents on sales of $5.3 billion, compared to Wall Street's consensus of $0.72 and $5.28 billion.

The analyst's model factors in a 24 percent rise in Macs sales to 1.64 million units and 22 percent rise in iPods to 9.7 million units with "little signs of cannibalization from iPhone."

"For iPhone, we anticipate a small contribution as only two days of sales were likely recognized in the quarter coupled with Apple's use of subscription accounting," he wrote. "We are modeling a conservative 250,000 units though we would like to note that this is at a much faster rate than Apple's previous big hit iPod nano, which sold 59,000 units per day."

Once again, the American Technology Research analyst is expecting Apple to model guidance conservatively for the current September quarter, likely citing its distributed iPhone accounting and the "lower margin" back-to-school season.

"We are modeling $5.8 billion and $0.77 versus consensus of $6.05 billion and $0.83," he told clients.

Wu reiterated his Buy rating on Apple shares with a $165 price target.

Since releasing the results of its second fiscal quarter in April, Apple shares have risen some 51 percent compared to just a 12.5 percent rise in the NASDAQ.
post #2 of 25
Wu is nuts.

He is pushing the typical AAPL pattern of a pullback after earnings. He is too conservative. Come Sept when Apple is at $160 he will revise his target price to 200. In the mean time the idiots who follow him could have bought when the stock was 140.
post #3 of 25
Quote:
Originally Posted by g5man View Post

Wu is nuts.

He is pushing the typical AAPL pattern of a pullback after earnings. He is too conservative. Come Sept when Apple is at $160 he will revise his target price to 200. In the mean time the idiots who follow him could have bought when the stock was 140.

I wouldn't disregard his expertise. These guys are pretty good. Yahoo Finance tracks their reports, e.g., for Wu see http://biz.yahoo.com/a/6/61497.html. Unfortunately his Apple reports aren't posted. However, he certainly has tracked HP for example quite well.
post #4 of 25
Quote:
Originally Posted by Abster2core View Post

I wouldn't disregard his expertise. These guys are pretty good. Yahoo Finance tracks their reports, e.g., for Wu see http://biz.yahoo.com/a/6/61497.html. Unfortunately his Apple reports aren't posted. However, he certainly has track HP for example quite well.

Looks like the fabulous Gene Munster is even less accurate.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #5 of 25
Sheesh. What are they paying these guys? Someone who took the tour of the NYSE could have told you there will be volatility surrounding an earnings report. BTW - I once took that tour and had the stones to ask why you couldn't take photos while on the tour - you certainly couldn't record any secret info or even likely image anything important from up in the glassed-in gallery. The official answer? They're not worried about you walking away with any info. The flashes simply bother the people on the floor. Also - this is the same guy who had the lowest prediction of iPhone sales outside of Steve Ballmer.
post #6 of 25
Quote:
Originally Posted by jpellino View Post

Sheesh. What are they paying these guys? Someone who took the tour of the NYSE could have told you there will be volatility surrounding an earnings report. BTW - I once took that tour and had the stones to ask why you couldn't take photos while on the tour - you certainly couldn't record any secret info or even likely image anything important from up in the glassed-in gallery. The official answer? They're not worried about you walking away with any info. The flashes simply bother the people on the floor. Also - this is the same guy who had the lowest prediction of iPhone sales outside of Steve Ballmer.


Clearly 250,000 is too low for the first weekend. One estimate was 200,000 to be a hit, another had a 400,000 estimate to be a hit. So what number would be a "surprise"?

Maybe 700,000 would surprise people. Although I don't think it would surprise the people who waited in line. I my trips to the Apple store over the last three months, crowds were way up and people were carrying out hardware like it was going out of style? (Shouldn't that be coming into style?)

What has been a traditionally week quarter could surprise everyone with sales up across the board. As to iPod erosion. There were a lot of Graduation iPods going out the door too. Look for Mac sales to gain significant market share too.

I'm sure the PC Fan Boys will find something to not like in all of Apple's success. As to the Wall Street types? Well 80% of them cannot even pick stocks that beat the averages. And they charge a fortune to make those terrible picks!
post #7 of 25
Quote:
Originally Posted by AppleInsider View Post

After surging for the past several weeks, shares of iPhone maker Apple Inc. could experience some short-term volatility around the company's fiscal third quarter earnings report this Wednesday, warns one Wall Street analyst.

"We believe buy-side investors have more or less figured over the past 18 months that Apple sell-side estimates tend to be overzealous and sometimes outright irrational," American Technology Research analyst Shaw Wu wrote in note to clients Monday. "Regardless, we advise investors to take advantage should Apple shares pull back on short-term concerns."

Like many fellow analysts, Wu expects the Cupertino-based company to report revenue and per-share earnings well above its guidance of $5.1 billion and $0.66. Specifically, he's modeling for earnings of $0.73 cents on sales of $5.3 billion, compared to Wall Street's consensus of $0.72 and $5.28 billion.

The analyst's model factors in a 24 percent rise in Macs sales to 1.64 million units and 22 percent rise in iPods to 9.7 million units with "little signs of cannibalization from iPhone."

"For iPhone, we anticipate a small contribution as only two days of sales were likely recognized in the quarter coupled with Apple's use of subscription accounting," he wrote. "We are modeling a conservative 250,000 units though we would like to note that this is at a much faster rate than Apple's previous big hit iPod nano, which sold 59,000 units per day."

Once again, the American Technology Research analyst is expecting Apple to model guidance conservatively for the current September quarter, likely citing its distributed iPhone accounting and the "lower margin" back-to-school season.

"We are modeling $5.8 billion and $0.77 versus consensus of $6.05 billion and $0.83," he told clients.

Wu reiterated his Buy rating on Apple shares with a $165 price target.

Since releasing the results of its second fiscal quarter in April, Apple shares have risen some 51 percent compared to just a 12.5 percent rise in the NASDAQ.

It will be volatile alright. Strap yourself to the rocket if you got the guts to ride it . The rocket has a full load and the fuse was already lit so stand back all you onlookers, The show is about to begin. Actually the fuse hit the fuel years ago ,and it's been one great ride already, but we still have a full rocket, great guidance system , and a FABULOUS pilot ,,,, and here we go again ,,,tear out of my eye,,,GO STEVE,,GO GET 'EM BOY.
post #8 of 25
I'm hoping for a drop because I'd like to buy some more.
post #9 of 25
Quote:
Originally Posted by g5man View Post

Wu is nuts.

He is pushing the typical AAPL pattern of a pullback after earnings. He is too conservative. Come Sept when Apple is at $160 he will revise his target price to 200. In the mean time the idiots who follow him could have bought when the stock was 140.

If you follow the history of Apple's price, you will se that there is a very good chance he is correct.

The earnings are already built into the current stock price. With the multiple being so high, if the earnings aren't VERY good, there could be a pullback. In addition, it would depend on Apple's guidance for the next quarter. While Apple is known to be conservative there, if their estimate falls too short of industry expectations, the assumption is that Apple knows something they don't, and a pullback would be seen as justified.

Don't get the fan-boyish concept that everything moves straight up. Setbacks occur with regularity.

Just don't allow them to affect the long term thinking.

Will I sell by Wednesday? No. But, I do expect that a slight pullback is a 50/50 possibility.
post #10 of 25
Quote:
Originally Posted by drjjones View Post

It will be volatile alright. Strap yourself to the rocket if you got the guts to ride it . The rocket has a full load and the fuse was already lit so stand back all you onlookers, The show is about to begin. Actually the fuse hit the fuel years ago ,and it's been one great ride already, but we still have a full rocket, great guidance system , and a FABULOUS pilot ,,,, and here we go again ,,,tear out of my eye,,,GO STEVE,,GO GET 'EM BOY.

Wow!!

You don't sound like the serious investor from last night.
post #11 of 25
Quote:
Originally Posted by melgross View Post

If you follow the history of Apple's price, you will se that there is a very good chance he is correct.

The earnings are already built into the current stock price. With the multiple being so high, if the earnings aren't VERY good, there could be a pullback. In addition, it would depend on Apple's guidance for the next quarter. While Apple is known to be conservative there, if their estimate falls too short of industry expectations, the assumption is that Apple knows something they don't, and a pullback would be seen as justified.

Don't get the fan-boyish concept that everything moves straight up. Setbacks occur with regularity.

Just don't allow them to affect the long term thinking.

Will I sell by Wednesday? No. But, I do expect that a slight pullback is a 50/50 possibility.

Yes, you are quite right. But does one need analyst to validate an insight like that? I think that there is something to the criticism that most of these guys/gals lag, not lead, prices, and they are quite good at stating the obvious a lot of the time.
post #12 of 25
Quote:
Originally Posted by halhiker View Post

I'm hoping for a drop because I'd like to buy some more.

try tomorrow around 9:45 EST.,,,maybe one point,,you wanna buy some on friday at 3 and pay $159 ?
post #13 of 25
Quote:
Originally Posted by melgross View Post

If you follow the history of Apple's price, you will se that there is a very good chance he is correct.

The earnings are already built into the current stock price. With the multiple being so high, if the earnings aren't VERY good, there could be a pullback. In addition, it would depend on Apple's guidance for the next quarter. While Apple is known to be conservative there, if their estimate falls too short of industry expectations, the assumption is that Apple knows something they don't, and a pullback would be seen as justified.

Don't get the fan-boyish concept that everything moves straight up. Setbacks occur with regularity.

Just don't allow them to affect the long term thinking.

Will I sell by Wednesday? No. But, I do expect that a slight pullback is a 50/50 possibility.

Pullback might even be 95 percent chance ,,,but as you can see by their 2 year chart there was a huge jump july 14,2006 when they reported on 13th 2006. If it goes down to 110, about a one in a thousand chance ,,, I'll be shocked and so will everyone on wallstreet. But my bottom line is,,, talk to me at Halloween when its 200.
post #14 of 25
Quote:
Originally Posted by melgross View Post

Wow!!

You don't sound like the serious investor from last night.

I'm pretty serious,,what do you think happens to the stock if they announce earnings of 1.00 to 1.14 ,my estimate, ,,I am very serious..My first stock was Gillette back when i was 8 years old. Dad bought me $300 worth for Christmas present . Next year it was Kentucky Life Insurance. Next year it was Exon. I charted those stocks in the newspaper everyday for three or four years .. never got to sell them .. never got to pick them . But i watched and charted those stocks every day . He let me sell them when I graduated dental school and bought a new Volkswagen Rabbit, 1975. I was serious then and now . Now really .. what do you think happens on thursday and friday IF it is 1.14
EPS.
post #15 of 25
Quote:
Originally Posted by halhiker View Post

I'm hoping for a drop because I'd like to buy some more.

it's 143.64 now maybe u should jump quick ,,who knows ? If it.s up today i'll buy more on margin tomorrow . I'll try before 10 am . you might get a great price thursday morning but I'm betting the other way .
post #16 of 25
Quote:
Originally Posted by drjjones View Post

Pullback might even be 95 percent chance ,,,but as you can see by their 2 year chart there was a huge jump july 14,2006 when they reported on 13th 2006. If it goes down to 110, about a one in a thousand chance ,,, I'll be shocked and so will everyone on wallstreet. But my bottom line is,,, talk to me at Halloween when its 200.

And if its $140 on Halloween, can we talk to you about fronting us some money for our margin call?
post #17 of 25
Quote:
Originally Posted by Louzer View Post

And if its $140 on Halloween, can we talk to you about fronting us some money for our margin call?


Sure,,,, as much as you will front me now .
post #18 of 25
You guys are hilarious .

I bought more today and I will buy more on Wed. All on margin I might add. Not to concerned about a big pull back. We might have a 5% correction, but if my estimate of 1 is correct we will see an upside of 5%.

DrJones,

do you think we will see a stock split soon?
post #19 of 25
Quote:
Originally Posted by anantksundaram View Post

Yes, you are quite right. But does one need analyst to validate an insight like that? I think that there is something to the criticism that most of these guys/gals lag, not lead, prices, and they are quite good at stating the obvious a lot of the time.

Analysts are needed. Maybe we don't need them, though they are fun, and interesting to read.

As I've said many times before, the reports that these companies generate, contain far more detailed information than is let loose to the news wires.
post #20 of 25
Quote:
Originally Posted by drjjones View Post

Pullback might even be 95 percent chance ,,,but as you can see by their 2 year chart there was a huge jump july 14,2006 when they reported on 13th 2006. If it goes down to 110, about a one in a thousand chance ,,, I'll be shocked and so will everyone on wallstreet. But my bottom line is,,, talk to me at Halloween when its 200.

I don't see them at 110 either. But, I agree with Cramer that it could pull back to about 135. And he is just about one of the most bullish on Apple I've seen in a long time.
post #21 of 25
Quote:
Originally Posted by drjjones View Post

I'm pretty serious,,what do you think happens to the stock if they announce earnings of 1.00 to 1.14 ,my estimate, ,,I am very serious..My first stock was Gillette back when i was 8 years old. Dad bought me $300 worth for Christmas present . Next year it was Kentucky Life Insurance. Next year it was Exon. I charted those stocks in the newspaper everyday for three or four years .. never got to sell them .. never got to pick them . But i watched and charted those stocks every day . He let me sell them when I graduated dental school and bought a new Volkswagen Rabbit, 1975. I was serious then and now . Now really .. what do you think happens on thursday and friday IF it is 1.14
EPS.




A buck?







Well...






I'm much too mature...







But, uh, I'll be back in a moment...



















Ok, that's much better.

Now, where were we?
post #22 of 25
Had to stretch?

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #23 of 25
Quote:
Originally Posted by SpamSandwich View Post

Had to stretch?

Ah, a bit of over-exuberance.
post #24 of 25
Quote:
Originally Posted by g5man View Post

You guys are hilarious .

I bought more today and I will buy more on Wed. All on margin I might add. Not to concerned about a big pull back. We might have a 5% correction, but if my estimate of 1 is correct we will see an upside of 5%.

DrJones,

do you think we will see a stock split soon?

I was hoping that would be part of the conference call wed. that they are announcing a two for one split ..,,if they do it like before they didn't let it get to 150.. but i cant remember when it was or should i say i can't remember how it got before they split it ..
post #25 of 25
Quote:
Originally Posted by drjjones View Post

I was hoping that would be part of the conference call wed. that they are announcing a two for one split ..,,if they do it like before they didn't let it get to 150.. but i cant remember when it was or should i say i can't remember how it got before they split it ..

Well, we can just look at what happened today. ATT announces about 149 thousand activations the first two days, and Apple's stock drops down to 136.55, though it's now 139.77, as I type this.

What will happen tomorrow is anyone's guess.

I think the time before, it was 100, and the time before that was 150.
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