German investment firm Berenberg predicts doom for Apple, sets price target of $60

Posted:
in AAPL Investors edited March 2015
Berenberg Bank believes Apple's financial model is too reliant on the iPhone, and has predicted that the company's shares will plummet more than 50 percent to $60 -- a price target so extreme that it seems more of a statement than an actual, plausible forecast.




Berenberg issued a note to investors on Thursday, a copy of which was provided to AppleInsider, presenting an extreme bear case for the most valuable and profitable company in the world.

To say that Berenberg's $60 price target is an outlier would be an understatement, as even the few major investment firms who are bearish on AAPL still have targets above $100. Shares of Apple were trading at around $128 in Thursday morning trading.
Berenberg's $60 price target is less than half of Apple's current trading price, and is a major outlier among Wall Street forecasts.
The justification for Berenberg's extreme price target, according to analyst Adnaan Ahmad, is that Apple relies too heavily on the iPhone for its profits. Ahmad noted that the iPhone accounts for 70 percent of Apple's revenues, and 85 percent of its operating profit.

Simply put, Ahmad believes that the "law of large numbers" will quickly catch up with Apple.

"As this accelerated replacement cycle slows down, iPhone volumes will turn negative in terms of growth," the analyst wrote. "As we have also stated, there is, in our view, a limit to how much share Apple can take at the high-end, and its price premium and recent hike must narrow over time, as it has done in the consumer electronic space (even for Apple's other products --?iPod, iPad and Mac)."

Ahmad doesn't see much hope on the horizon from the Apple Watch, but he is bullish on the prospect of an Apple-built automobile. The analyst said he believes that Apple should acquire electric-car maker Tesla to give it a foothold in the auto business.

Outside of Berenberg's extreme price target, Apple bears include Wells Fargo, which has maintained a "valuation range" of between $105 and $115 for the iPhone maker. Cowen and Company also set a target of $115 last month -- a prediction that became underwater almost immediately as shares of Apple posted serious gains following its December quarter results.

Despite its outlier projection for Apple, Berenberg is an established German financial institution, originally founded in 1590. It brought in 4.5 billion euros in revenue in 2013, and employs more than 1,300 workers.

On the opposite end of the spectrum is billionaire activist investor Carl Icahn, who believes that Apple should currently be trading at $216 per share. In his view, AAPL is a "no-brainer" investment.
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Comments

  • Reply 1 of 94
    I want some of whatever they are smoking in Germany.
  • Reply 2 of 94
    This is useless without a timeline. When he's wrong for the next 50 years, and right on the 51st he can then say, "See, I told you I was right."

    To quote Chuck Palahniuk (Fight Club): "On a long enough time line, the survival rate for everyone drops to zero."
  • Reply 3 of 94
    rob53rob53 Posts: 2,646member
    iPhones dropping but an Apple car? If I had any money with this guy I'd get out now.
  • Reply 4 of 94
    I want some of whatever they are smoking in Germany.

    Tobacco?
  • Reply 5 of 94
    Maybe he knows about another stock split ?
    /s
  • Reply 6 of 94

    This values them at less than about double the *cash* they have (I think ... doing the math in my head here).  Heck Apple could take themselves private in 5 years, if shares hit $60, even if revenue only stays constant :)

  • Reply 7 of 94
    Not every analyst comment or view deserves a platform.
  • Reply 8 of 94
    This is a bit loony. While I would like to see a better spread of revenues and profits across more product lines, this kind of statement could have been made a year or two ago, and look where the stock is now.

    Bearish views seems to ignore the fact that there is still immense worldwide market share for Apple to capture, and their incredibly high customer satisfaction levels, along with a large product ecosystem that works extremely well, will continue to fuel upgrade cycles and cross pollination of sales as their base grows.

    Having said that, the smartphone is probably past the apex of bell curve of technology advancement, so we are probably 24 months from a point when all manufacturers are looking more at a price sensitive commodity market than a high value proposition.
  • Reply 9 of 94

    Apple would lead the market for a couple years with no new model. Just think what will happen if they try. Their short position must be in trouble.

  • Reply 10 of 94
    Quote:

    Originally Posted by hngfr View Post



    Maybe he knows about another stock split ?

    /s



    yeah ... 3:1 would make it about right ... why the /s? 

  • Reply 11 of 94
    jungmarkjungmark Posts: 6,867member
    Never heard of this bank. Now I know why.
  • Reply 12 of 94
    satchmosatchmo Posts: 2,699member

    We need to put this guy and Carl Ichan in a room together and have them battle it out. 

  • Reply 13 of 94
    b9botb9bot Posts: 238member



    Apple has many products than just the iPhone. Apple pay is now taking in revenue and cell phones will be around for a long time. Other products like Apple Watch are coming. So this so called doom is so B.S.!

  • Reply 14 of 94

    Oh my God.  End of Days!  Apple is doomed!! Sell, everyone, sell !!!  /s

  • Reply 15 of 94
    jungmark wrote: »
    Never heard of this bank. Now I know why.

    Apparently they've been coasting on their reputation.
  • Reply 16 of 94
    Should you really be giving this idiot coverage?
  • Reply 17 of 94

    If he really believes this, then he should be shorting like crazy. 

     

    Lucky for him Germany has a pretty strong social safety net. 

  • Reply 19 of 94
    They probably want in on some of the money.

    Bill- "Hey, Apple stock is skyrocketing! I have an idea. Let's tell the media that their stock is going to plummet in hopes that it does, even at least a little bit. Then we can buy in at the lower price and BOOM! We're golden!"

    Vern- "Sounds good to me..."

    Stu- "Then we can say we were wrong about it and it really should be at $200+!"
  • Reply 20 of 94
    We need to ask Ahmad to disclose his short position on Apple...........then we might better understand his bearish and bullsh*t approach..........but I sure hope he's wrong!
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