Market watchers see buying opportunity as Apple shares slide after June quarter miss

Posted:
in AAPL Investors edited July 2015
Lofty expectations were beyond the reach of Apple last quarter, sending shares tumbling more than 7 percent. But a number of bullish analysts see the stock pullback as a buying opportunity for investors, who can get in at a cheaper price before the launch of new iPhones.




Though reactions were mixed after the results of Apple's fiscal 2015 third quarter, high-profile analysts stood by the stock and maintained their optimistic outlook. AppleInsider offers a summary of how Wall Street reacted to the results of Apple's June quarter.

RBC Capital Markets

RBC, Piper Jaffray, Morgan Stanley, UBS, and J.P. Morgan all see an AAPL selloff as an opportunity for investors to buy at a discount.
Apple's June quarter helped to reset market expectations to more realistic levels, in the eyes of analyst Amit Daryanani. He sees a number of data points from the June quarter that should give investors confidence, including:
  • Only 27 percent of the iPhone install base has upgraded to the iPhone 6 and iPhone 6 Plus, meaning there is plenty of room for growth for an anticipated "iPhone 6s" series.
  • Apple's gross margin guidance was down 70 basis points, but Daryanani said that number is "minimal" given the transition to a new iPhone product line and foreign exchange challenges. He believes margins could return to above 40 percent in fiscal 2016.
  • Only 12 percent of China has 4G LTE coverage, which gives even more room for iPhone expansion in the nation of over 1 billion people
  • iPhone average selling price remained strong at $660, revealing customers are opting for higher end models with more memory or a larger screen.



RBC Capital Markets has maintained its "overweight" rating for AAPL stock, with a price target of $150.

Piper Jaffray

Analyst Gene Munster also said he's an AAPL buyer on the market pullback after the company's third-quarter results. He believes Apple will continue to gain share in the high-end smartphone market, and that margins will improve in the anticipated "S" iPhone product cycle.

Apple shipped a record 47.5 million iPhones in the quarter, but that came in short of market expectations, some of which were well over 50 million units. But Munster noted that Apple reported significant market share gains in the quarter, and the company also reduced some of its channel inventory ahead of an upcoming product refresh.

"Setting aside that investor expectations for the iPhone were higher than reported, iPhone unit sell-through grew 36 (percent year over year) vs. the overall smartphone market's growth in the low-teens," Munster wrote. "We believe that as with prior quarters, this demonstrates that the iPhone 6 cycle remains strong and it appears the strength should be able to continue into (calendar year 2016)."

Piper Jaffray has maintained its "overweight" rating with a price target of $172.


The New York Stock Exchange, credit Carlos Delgado via Wikipedia.

Morgan Stanley

Following an expectations reset last quarter, analyst Katy Huberty sees an "attractive" investment in Apple. She's particularly encouraged by more realistic iPhone expectations, which she said will help to "de-risk" the second half of calendar 2015.

With strong demand, a $660 average selling price, and 73 percent of the installed base yet to buy a larger-screened iPhone, Huberty believes that Apple can grow iPhone units year over year heading into the "iPhone 6s" product cycle.

Morgan Stanley has maintained its "overweight" rating for AAPL stock with a price target of $155.

J.P. Morgan

The immediate selloff of AAPL shares following its quarterly results was "overdone," in the eyes of analyst Rod Hall. He said that better than expected iPhone average selling prices actually drive a slight increase to his forecasts for the company.

Hall said that investors should use "any weakness in trading to add to holdings."

Hall has increased his fiscal year 2016 earnings per share estimate by 2 percent to $10.35, and has also increased his iPhone average selling price estimate and gross margin assumption. He's also established a December 2016 price target of $145, and reiterated an "overweight" rating.


UBS

Though iPhone shipments were "light," analyst Steven Milunovich sees long-term value being built. In his view, there's no reason for investors to get scared out of the company's stock.

"We see limited downside as long as the gross margin stays in the upper 30s," Milunovich wrote. "stock price appreciation depends on Apple showing some iPhone unit growth in (fiscal year 2016)."

He was particularly bullish on the iPhone average selling price, which was up $99 year over year even with a $24 currency hit from foreign exchange rates.

UBS has maintained its "buy" rating with a 12-month price target of $150.

FBR Capital Markets

As the "gold standard" of technology, Apple is held to a higher standard than its peers, said analyst Daniel Ives. In addition to lower-than-expected iPhone sales, market watchers have also expressed concern about Apple's September quarter guidance.

But Ives remains focused on the growth story in China, where Apple continues to see significant gains. In the last quarter alone, revenues were up 112 percent.

For that reason, Ives said he remains bullish on Apple, and has maintained his "outperform" rating. In light of the stock's losses, however, FBR has reduced its price target on AAPL from $185 to $175.


Cowen and Company

Not all analysts remain bullish on Apple after its June quarter, however. Timothy Arcuri downgraded the stock to "market perform" after its results were disclosed, and trimmed his price target from $140 to $130.

Arcuri cited a "tepid" quarter for iPhones, and also "mounting China demand concerns." The analyst also said his sources in the supply chain suggest that new iPhone builds could be down from the previous product cycle for the first time ever.

"In time, we expect new service offerings will ultimately pull through meaningful hardware sales, but for the near and even medium-term, iPhone units remain the key driver for the stock," Arcuri said.

Wells Fargo

Finally, Apple bear Maynard Um has also maintained his "market perform" rating for the company. He said that while Apple's results may have been good "in a vacuum," they disappointed relative to expectations.

"While management indicated only 27 percent of pre-6/6s active users have upgraded to the newest iPhones, we note that the base likely includes refurbished and hand-me-downs, which we would argue may not be ripe for upgrade," Um said.

Wells Fargo has issued a valuation range of between $125 and $135 for AAPL stock.
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Comments

  • Reply 1 of 61
    jmgregory1jmgregory1 Posts: 445member
    Even this headline, that Apple "missed" expectations, is part of the problem. They missed financial analysts expectations, but beat their own guidance. I know I would rather follow what the company says to expect, than to use an outsider's either high or low numbers, which they do mostly to manipulate stock pricing.

    It's crazy that some companies who perform below expectation, see upward ticks in their stock, but Apple seemingly can't win, as increases in sales and profits still send the stock sliding. Again, it only makes sense if the market is simply trying to manipulate Apple stock price.
  • Reply 2 of 61
    originalgoriginalg Posts: 380member

    Are these the same analysts that set the "lofty expectations" which resulted in the "miss" and caused the dip in the stock, only to recommend a buy the day after?

  • Reply 3 of 61
    SpamSandwichSpamSandwich Posts: 28,371member
    9.75 out of 10 analysts suffer from head in rectum disease. Won't you please help to find a cure?
  • Reply 4 of 61
    SpamSandwichSpamSandwich Posts: 28,371member
    sog35 wrote: »
    This is how full of shit these analysis are.

    When Apple released earnings in April here was the estimates for the June Quarter:

    Q3 revenue forecast: $46-$48 billion versus [SIZE=26px]$47 billion expected[/SIZE]

    Read more: http://www.businessinsider.com/apple-q2-earnings-2015-4#ixzz3gd4LRXDA


    So analysists were expecting June quarter revenue to be $47 billion in April.

    But as we got to May, Jun, and Jul they kept on raising their revenue expectation until it was impossible for Apple to reach it (over $50 billion)



    That right there tells you this is manipulation.  Why the HELL did the analysist raise their revenue expectation from $47 billion to $50 billion since April?  The only reason is to either save face if Apple had another blowout or to make it impossible for Apple to exceed 'expectation'

    Yep.
  • Reply 5 of 61

    Those low upgrade numbers are curious indeed. In theory just about every iPhone 5 owner is eligible by now, as well as most 4 and 4S owners (assuming they bought new).

  • Reply 6 of 61
    macinthe408macinthe408 Posts: 1,050member
    Quote:
    Originally Posted by sog35 View Post

     

    All these analysist are a-holes.

     


     

    I'd beg to differ, and call them smart. Like you, I'm sure they made a profit on their collective downgrading of APPL based on its 'poor' performance. I'll bet you 50 shares that today they're calling Apple the greatest company of all time, after disparaging them in after-hours trading. 

  • Reply 7 of 61
    aaarrrggghaaarrrgggh Posts: 1,554member
    Still a safer investment than GOOGL or most of the heated names. Picked up 5 LEAPs today, all I can justify. If the global economy improves (exchange rate impact) then there is a bit more upside potential, but right now I am not counting on AAPL seeing $135 again before next April.
  • Reply 8 of 61
    MacProMacPro Posts: 16,945member
    "Market watchers see buying opportunity as Apple shares slide after June quarter miss" Miss????? Seriously? If anyone wants to see a real bad news check out Microsoft!

    [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/61173/width/500/height/1000[/IMG]
  • Reply 9 of 61
    lkrupplkrupp Posts: 5,644member

    “Market watchers see buying opportunity as Apple shares slide after June quarter miss"

     

    Oh AI, how you’ve fallen to the gutter with the click bait crowd. A MISS? A MISS? I’m done with this nonsense. I won’t even bother to read anything that remotely looks like a financial prediction or estimate let alone post about it. Done.

  • Reply 10 of 61
    MacProMacPro Posts: 16,945member
    sog35 wrote: »
    Does anyone know how to contact Digler?

    I think he should do an article on how the analysist kept raising expected revenue this quarter so Apple would miss revenue.

    Again in April the analyst expected $47 billion in revenue for Q3.

    But they kept raising their expectation to $50 billion.  To me that looks like bullshit.  They only raised it to make Apple look bad

    Spot on!
  • Reply 11 of 61
    SpamSandwichSpamSandwich Posts: 28,371member
    Those low upgrade numbers are curious indeed. In theory just about every iPhone 5 owner is eligible by now, as well as most 4 and 4S owners (assuming they bought new).

    Speaking for myself, I've been waiting on the "s" version and holding onto my 5, just because it still works fine...although my eyesight has gotten much worse during the meantime so the bigger screen will be nice.
  • Reply 12 of 61
    rogifanrogifan Posts: 10,669member
    It's all Wall Street once again thinking iPhone has peaked and trotting out the old tired iPhone is too expensive line. Never mind that YOY sales increased 35% and ASP was up $100. According to the clowns Apple is always one quarter away from disaster with iPhone. So long as Apple is really iPhone, Inc. that won't change.
  • Reply 13 of 61
    SpamSandwichSpamSandwich Posts: 28,371member
    sog35 wrote: »
    Does anyone know how to contact Digler?

    I think he should do an article on how the analysist kept raising expected revenue this quarter so Apple would miss revenue.

    Again in April the analyst expected $47 billion in revenue for Q3.

    But they kept raising their expectation to $50 billion.  To me that looks like bullshit.  They only raised it to make Apple look bad

    If Dilger wanted to do some actual journalism, he'd "ambush interview" these fraudsters and call them on their own lies.
  • Reply 14 of 61
    tmaytmay Posts: 2,320member
    Quote:

    Originally Posted by sog35 View Post

     

    Does anyone know how to contact Digler?

     

    I think he should do an article on how the analysist kept raising expected revenue this quarter so Apple would miss revenue.

     

    Again in April the analyst expected $47 billion in revenue for Q3.

     

    But they kept raising their expectation to $50 billion.  To me that looks like bullshit.  They only raised it to make Apple look bad


    Dirk Digler...?

     

    ("Boogie Nights", Mark Wahlberg)

  • Reply 15 of 61
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    I bought 300 shares last night at $122 and sold this morning for a quick $400 profit.

    I'm still holding 1000 shares.

    I have no doubt this will see $150 sometime this year.



    All these analysist are a-holes.

    Apple guided for revenue to be $46-48 billion for Q3.  They blew that away with $49.4 billion.  Apple blew away there own expectations. Wall Streets expectations were unrealistic, yet they penalize Apple for not meeting some pipe dream $51 billion mark.

    I have raised eyebrows because it seems iPhone and Q4 estimates shot up right before earnings (and with a herd mentality if one raises estimates the others follow). What were these 50-53M iPhone whisper figures based on?
  • Reply 16 of 61
    SpamSandwichSpamSandwich Posts: 28,371member
    sog35 wrote: »
    Analysis Joe:  My estimate for June quarter is $47 billion revenue

    One month later

    Hedge Fund Partner:  I'd really like to buy some Apple shares cheap.

    Analysis Joe: okay.  My estimate for June quarter revenue is now $49 billion

    One month later


    Hedge Fund Partner:  Still not cheap enough. 

    Analysis Joe: okay.  My estimate for June quarter revenue is now $51 billion

    Apple announces $49 billion in revenue

    Analysis Joe: Damn.  They missed my $51 billion estimate

    stock tanks

    Ba-dum. Tsssssshhhh!
  • Reply 17 of 61
    originalgoriginalg Posts: 380member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Those low upgrade numbers are curious indeed. In theory just about every iPhone 5 owner is eligible by now, as well as most 4 and 4S owners (assuming they bought new).




    I have a 4S and haven't upgraded, mainly because it still works for my needs. My carrier requires me to change plans if I do a hardware upgrade which over the course of 2 years would almost be the same if I bought a phone outright. I'm starting to want all of the new features I've been missing out on, but the next gen is just around the corner at this point...

  • Reply 18 of 61
    rogifanrogifan Posts: 10,669member
    "Market watchers see buying opportunity as Apple shares slide after June quarter miss" Miss????? Seriously? If anyone wants to see a real bad news check out Microsoft!

    1000

    But Wall Street is happy about Microsoft because they always thought the Nokia acquisition was stupid and are happy to see Nadella undoing it.
  • Reply 19 of 61
    muadibemuadibe Posts: 118member

    As many here have stated, you have analysts arbitrarily increasing expectations of Apple with the apparent intention of knocking the stock price.  I agree there should be some detailed grilling of these analysts and their numbers.  They should have to explain why they adjusted expectations with no obvious reason.

     

    I just wonder how much of this is Wall Street penalizing Apple simply because of Tim Cook's lifestyle.   I know this might seem out there, but in the absence of anything that makes sense, you have to wonder.  

     

    Incidentally, I'm not the only person who has written about this possibility.  Again, lacking any seemingly rational reason, you have to wonder what's going on.

  • Reply 20 of 61
    rogifanrogifan Posts: 10,669member
    muadibe wrote: »
    As many here have stated, you have analysts arbitrarily increasing expectations of Apple with the apparent intention of knocking the stock price.  I agree there should be some detailed grilling of these analysts and their numbers.  They should have to explain why they adjusted expectations with no obvious reason.

    I just wonder how much of this is Wall Street penalizing Apple simply because of Tim Cook's lifestyle.   I know this might seem out there, but in the absence of anything that makes sense, you have to wonder.  

    Incidentally, I'm not the only person who has written about this possibility.  Again, lacking any seemingly rational reason, you have to wonder what's going on.

    You think Wall Street is homophobic? I find that hard to believe. Apple stock reached record highs after Tim came out so I don't think Wall Street gives a shit about Tim Cook's private life.
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