Goldman Sachs initiates coverage of AAPL stock with neutral outlook, dismisses iPhone X 's...

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in AAPL Investors
Investment firm Goldman Sachs initiated coverage of the investment world's largest company, Apple, this week, and set things off with a pessimistic tone, projecting the stock price will stay relatively flat over the next year.




Analyst Rod Hall opened coverage of AAPL with a "neutral" rating and a 12-month price target of $161, which would be slightly lower than the levels the company was trading at as of Wednesday morning.

In a note to investors, a copy of which was seen by AppleInsider, the analyst forecast "weakening near-term datapoints on iPhone X demand," which he thinks could hold back shares ahead of its fiscal second quarter earnings report. He also sees downside to consensus iPhone revenue forecasts for the following June quarter.

"Beyond June, we see a path for earnings and share price improvement, but believe investors will look for confidence that estimates have bottomed, which may not occur until (fiscal year 2019)," Hall wrote.




Apple reported its best quarter ever last week, though iPhone sales came in below market expectations. However, the quarter was also one week shorter than the same period a year ago, somewhat skewing the results.

Still, bullish analysts had predicted a so-called "super cycle" spurred by the launch of the iPhone X, the first major redesign for Apple's handset since the iPhone 6 series.

Hall's projections, meanwhile, call for iPhone shipments to dip to 54.6 million in the current March quarter, which would be a 29 percent sequential decrease, and largely in line with typical seasonal trends. To him, that's evidence that the "super cycle" hype was misguided.

Still, he sees hope on the horizon, particularly as Apple plans to repatriate the majority of its overseas cash. Hall sees the stateside funds allowing for increased share buybacks, higher dividend payouts, and larger and more meaningful mergers and acquisitions.

Shares of AAPL were off slightly as of Wednesday morning, trading just north of $162. The company is down from its high of near $180 achieved in January.

Comments

  • Reply 1 of 7
    JFC_PAJFC_PA Posts: 173member
    They completely missed the extra week in last year’s quarter in their “analysis”. So: fail. 
    radarthekatSpamSandwichmagman1979
  • Reply 2 of 7
    for these people a 'Neutral' rating is as good as a downgrade. Views are either up or down.
  • Reply 3 of 7
    macxpressmacxpress Posts: 4,447member
    Goldman Sucks...
    magman1979
  • Reply 4 of 7
    lkrupplkrupp Posts: 6,092member
    Why, after all these years, would Goldman Sachs finally decide to cover AAPL all of a sudden?
    magman1979
  • Reply 5 of 7
    HyperealityHypereality Posts: 26unconfirmed, member
    The stock is a buy in terms of analyst consensus overall.  So maybe there is something political here about commencing coverage with a neutral recommendation. 

    I note the other GS story today is the they are doing a deal to provide credit facilities to Apple customers so in a sense they are pumping in cash into the sales funnel. 
     
    edited February 7
  • Reply 6 of 7
    Looks like Goldman Sachs is trying to cover a short position or trying to depress the price before a “pump.”

    Seriously as the “iPhone 6ers” retire their phones the super-cycle will occur...but it will probably play out more slowly over the next two years in a more gradual fashion.

    As a longstanding AAPL shareholder and an iPhone X owner, I have never been more optimistic of AAPL’s future.  I think the iPhone will dominate culture for the next handful of years.  It has become an essential tool for the 21st century and has radically changed human culture.  And once we realize it’s addictive qualities, the Apple Watch will be our antidote.
  • Reply 7 of 7
    I picked up a few more AAPL shares before the quarterly announcement, when the share price was dropping on stories of the X not selling well.  Sure, I wish I’d waited another week, but still did quite well.  No complaints here.
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