Citing supply chain checks, Jefferies cuts Apple price target to $420

Posted:
in AAPL Investors edited January 2014
Investment firm Jefferies believes there is a 25 percent chance Apple will miss its quarterly guidance, and has accordingly cut its price target for AAPL from $500 to $420.

Jefferies


Analysts have become increasingly pessimistic on Apple as the company's stock has fallen since the launch of the iPhone 5 last September. Among those bears is Peter Misek of Jefferies, whose new price target is below what AAPL stock is currently trading at.

Misek came under fire last month when he cited "channel checks" that allegedly indicated Apple was planning a product event in March related to the Apple TV set-top box. But reliable Apple commentator Jim Dalrymple of The Loop quickly refuted those claims and said Apple would not be holding such an event.

In his latest note to investors, Misek said his checks with Apple suppliers have indicated that Apple is reportedly having problems with new casing colors. He said that Apple had hoped to launch its so-called "iPhone 5S" in June, but now the device will debut between July and September.

Misek also claims that some of the components for Apple's rumored low-end iPhone are higher than he expected, including a 4-inch Retina display and the same application processor as the iPhone 5S. As such , he expects the pricing of the handset will be between $350 and $450.

Jefferies


The analyst has cut his iPhone estimate for the current quarter from 37.5 million to 35 million. He sees the company reporting revenues of $41 billion, but gives 25 percent "probability" that Apple will miss its guidance due to sales slowing even further in the second half of March.

Analysts and investors largely viewed Apple's previous holiday quarter as disappointing, as evidenced by the continued slump seen in the company's stock price. But despite that perception, the company still outperformed all of the most profitable U.S. companies with net income of $13.1 billion.

When Apple's stock was on its upward trajectory, market watchers had high hopes, with price targets as great as $1,111 by Topeka Capital Markets. And though executives at the company have signaled they are "very optimistic" about their product pipeline, a number of analysts have continued to cut their targets, citing increased competition from rivals like Samsung and Mac sales that slumped in the December quarter.
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Comments

  • Reply 1 of 159
    monstrositymonstrosity Posts: 2,182member


    Another one to the ignore list.

  • Reply 2 of 159
    jdnc123jdnc123 Posts: 233member
    While everyone around them is getting better, Apple is getting worse. That is going to be the theme until they change it and unfortunately, a 5S won't change so we'll have most of the year where the mainstream view is that Apple is in decline because they whiffed on product cycles and further can't execute. Frankly, its hard to argue that isn't the case.
  • Reply 3 of 159
    jasonfjjasonfj Posts: 530member
    Analysts lowering projections hopefully means only one thing... AAPL will beat them and reverse the trend of the past 6 months.
  • Reply 4 of 159
    rogifanrogifan Posts: 10,669member


    So what was the drop from 700 to 430 then?  Shouldn't this alleged bad news already be priced into the stock?  And how many Apple suppliers would actually talk to a Wall Street analyst?  Wouldn't most of them have NDA's?  I have a hard time taking these people seriously because they can predict anything and nothing happens if their predictions don't come true.  So what incentive do they have to be accurate?  Nobody seems to care if they're not.

  • Reply 5 of 159
    rabbit_coachrabbit_coach Posts: 1,114member

    Quote:

    Originally Posted by monstrosity View Post


    Another one to the ignore list.



    Sad thing, too many people will believe guys like this.

  • Reply 6 of 159
    pendergastpendergast Posts: 1,358member
    jdnc123 wrote: »
    While everyone around them is getting better, Apple is getting worse. That is going to be the theme until they change it and unfortunately, a 5S won't change so we'll have most of the year where the mainstream view is that Apple is in decline because they whiffed on product cycles and further can't execute. Frankly, its hard to argue that isn't the case.

    Ok, I'll take the bait. It's early.

    Apple is getting worse? Really? By what measuring stick? Wouldn't a better argument be that Apple is stagnant while its competition grows? I'd disagree with that, but it would be defensible.

    Which product cycle did they whiff on? The iPad? The iPhone 5? The iPad mini? Perhaps you're talking about the Mac, which is a small fraction of their business, and one that was down for a single quarter due to supply constraints.

    What haven't they executed? The only thing I can think of is some half-baked web services they've tried to push, but they've been doing that for years, even when the stock was high.
  • Reply 7 of 159
    Supply chain check ??? Did he check his axxholes too ?
  • Reply 8 of 159
    jpvnjpvn Posts: 40member
    Next thing you know apple price target is cut to -100 , this people are ridiculous.
  • Reply 9 of 159
    flaneurflaneur Posts: 4,485member
    Sad thing, too many people will believe guys like this.

    Too many, like our new nervous Nellie jndc123, whom we are going to have to deal with presently, it looks like. He's on the job today again.

    As Tim Cook tried to tell everybody, trying to draw any conclusions from supply chan "news" is stupid. He didn't really say "stupid," of course, but that is what he meant.

    Another thing that is stupid is basing any long-term prediction on what Apple is NOT doing right now. We will have no idea what Apple's intentions are for its empire until late this year. To be chewing your nails publicly and shrieking fearful demands at Tim Cook, like jndc 123 is doing here—to be doing that at this time is ridiculously premature, or immature.

    "Analysts" like Misek and Jeffries of couse make a living at this. jndc 123 is of course doing it for free.
  • Reply 10 of 159
    rabbit_coachrabbit_coach Posts: 1,114member

    Quote:

    Originally Posted by jpvn View Post



    Next thing you know apple price target is cut to -100 , this people are ridiculous.


    Well that would be great. If I buy 1 million AAPL stocks, I would get 100 Million cash.image


     


    I would hate to see a great company like Apple to be ripped apart like that though.image

  • Reply 11 of 159

    Quote:

    Originally Posted by Pendergast View Post





    Ok, I'll take the bait. It's early.



    Apple is getting worse? Really? By what measuring stick? Wouldn't a better argument be that Apple is stagnant while its competition grows? I'd disagree with that, but it would be defensible.



    Which product cycle did they whiff on? The iPad? The iPhone 5? The iPad mini? Perhaps you're talking about the Mac, which is a small fraction of their business, and one that was down for a single quarter due to supply constraints.



    What haven't they executed? The only thing I can think of is some half-baked web services they've tried to push, but they've been doing that for years, even when the stock was high.


     


    They're not getting worse, but I'd dare say they've been moving slow and competitors are catching up quickly.  I hope they're spending some of that cash hoard on a blockbuster iOS 7.  Apple has plenty of money and market share no matter what they do, but as an investor I hope they do something big this year.

  • Reply 12 of 159
    plagenplagen Posts: 151member


    I don't understand why people are so unhappy with the lowballing "analysts". If you are a long-term investor and have a reason to believe in your company long-term growth shouldn't you be happy with the stock price falling? Just use that as an opportunity to buy.

  • Reply 13 of 159
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by jdnc123 View Post

    While everyone around them is getting better, Apple is getting worse. That is going to be the theme until they change it and unfortunately, a 5S won't change so we'll have most of the year where the mainstream view is that Apple is in decline because they whiffed on product cycles and further can't execute. Frankly, its hard to argue that isn't the case.


     


    Frankly it's hard to understand why we let this tripe be posted.





    Originally Posted by techguy911 View Post

    I hope they're spending some of that cash hoard on a blockbuster iOS 7.  Apple has plenty of money and market share no matter what they do, but as an investor I hope they do something big this year.


     


    Why? What evidence is there for "failure" or "doing worse" even when they don't do something that one person by some magical arbitrary definition deems "blockbuster"? 

  • Reply 14 of 159
    golfmangolfman Posts: 15member
    Earnings tell all. We'll find out who is right in about a month and a half.

    Frankly I think there is a good chance it will be a rough quarter because the comp for 2Q is pretty tough. Starting in 3Q the comps get easier.
  • Reply 15 of 159
    aaarrrggghaaarrrgggh Posts: 1,567member
    As much as I am an AAPL fan, the troll posts indicating doom and gloom for Apple's future are important to read. There are a number of people who think Samsung is now more innovative than Apple, and a number of others that would say Google is more innovative.

    Google, maybe, but not Samsung. It is the "think different" crowd that simply wants to avoid Apple and is using any viable alternative to take on the opportunity.

    One co-worker got an S3 recently, and wants to dump it off on his wife and get something else. I suggested he use it for a "loaner" in the office for a month and let people see how "great" it is. That is about all it takes to destroy Samsung's sales.
  • Reply 16 of 159

    Quote:

    Originally Posted by golfman View Post



    Earnings tell all. We'll find out who is right in about a month and a half.



    Frankly I think there is a good chance it will be a rough quarter because the comp for 2Q is pretty tough. Starting in 3Q the comps get easier.




    Please explain.

  • Reply 17 of 159

    Quote:

    Originally Posted by aaarrrgggh View Post



    One co-worker got an S3 recently, and wants to dump it off on his wife and get something else. I suggested he use it for a "loaner" in the office for a month and let people see how "great" it is. That is about all it takes to destroy Samsung's sales.


     


    Then why are Samsung's sales growing.

  • Reply 18 of 159
    jdnc123jdnc123 Posts: 233member

    Quote:

    Originally Posted by Pendergast View Post





    Ok, I'll take the bait. It's early.



    Apple is getting worse? Really? By what measuring stick? Wouldn't a better argument be that Apple is stagnant while its competition grows? I'd disagree with that, but it would be defensible.



    Which product cycle did they whiff on? The iPad? The iPhone 5? The iPad mini? Perhaps you're talking about the Mac, which is a small fraction of their business, and one that was down for a single quarter due to supply constraints.



    What haven't they executed? The only thing I can think of is some half-baked web services they've tried to push, but they've been doing that for years, even when the stock was high.


    Fair.  Apple is stagnating.  Innovation is lacking.  That being said, Apple's earnings are shrinking while its competitors grow.


     


    The market believes Apple whiffed on a large screen and 'low-cost' iPhone, that they are late to the game.


     


    There are nearly daily stories of supply chain problems, delays, etc.  Maybe its just normal stuff that gets highlighted b/c Apple isn't integrated and Samsung is, but Samsung moved forward its launch of the S4....when was the last time Apple was earlier than expected to market with something.

  • Reply 19 of 159


    are these guys ever right?

  • Reply 20 of 159
    zoffdinozoffdino Posts: 192member

    Quote:

    Originally Posted by island hermit View Post


    Then why are Samsung's sales growing.



    The overall gross margin for all Samsung phones is about 20% compared to ~50% of Apple. Even at the high end segment (>$500 phones), Samsung is making 30-35%. Apple and Samsung are essentially following two different paths: one chasing biggest profit (Apple takes 65% of industry profit), one chases biggest unit sold number.

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