Analysts remain upbeat on Apple, downplay concerns
Investor concerns over the Intel transition and other aspects of Apple's business continue to weigh on the company's shares, but analysts alike remain confident in the Mac maker's strategy and are so far unwilling to shelve or alter their predictions of future growth.
"The recent stock action reminds us of a lull period last year from March to June 2005 when the stock corrected from $45 to $33, said Shaw Wu, an analyst for American Technology Research. "Interestingly, negative investor sentiment drove the stock weakness with comments and questions including: 'it can't get better', 'has Apple peaked?', and 'is growth slowing?' similar to ones we are hearing today."
"We believe the answers to these questions remain the same and it is that Apple has yet to see its best," Wu added.
Over the next 12-24 months, the analyst expects to see a Mac upgrade cycle of Intel Macs, continued penetration of iPod+iTunes in digital music and video, and an extension of both the Mac and iPod+iTunes franchises into new business areas such as home entertainment servers, cell phones, and other consumer electronics.
"We view this as a great opportunity to take advantage of this lull period to build or add to Apple positions," Wu said. "We believe a key metric to watch remains its progress in transitioning to Intel processors."
Gene Munster, an analyst for PiperJaffray, offered similar sentiments on Tuesday.
"We believe the stock has sold off primarily based on investor perception regarding the potential for an air pocket in growth over the next 1-2 quarters due to the Intel transition," Munster wrote in a research note obtained by AppleInsider. "Many investors are concerned that growth from existing Macs will slow as customers wait for new Macs and many also anticipate that the transition will be drawn out on the professional side by a lack of readiness from major software vendors such as Quark, Microsoft, and Adobe."
The analyst argues that Apple has, and will continue to have, various growth curves in different parts of its business that sometimes may not be in sync with eachother. "To look at a potential short-term trough in these curves and extrapolate the business based on this period is short-sighted in our minds," he said.
In support of his beliefs, Munster pointed out how a lot of investors were originally concerned about Apple's transition from the iPod mini to the iPod nano. However, with the addition of the video iPod, the company was able to align two growth curves that ultimately generated massive unit volume increases post-mini, he said.
Similarly, investors are concerned about a slowdown entering the Intel transition, Munster said. "We believe a slight air pocket is inevitable in front of all new product releases, but this scenario is factored into Mac estimates and we do not believe the transition will lead to Apple missing numbers."
Just like Wu, Munster agrees that Apple shares should inevitably reposition themselves.
"We see now as the time to get positioned for the next peak as Apple's various growth curves get closer to aligning themselves again," he wrote.
Apple shares have fallen over 20 percent in less than three weeks. The stock was trading up 39 cents, or 0.58 percent, at press time.
"The recent stock action reminds us of a lull period last year from March to June 2005 when the stock corrected from $45 to $33, said Shaw Wu, an analyst for American Technology Research. "Interestingly, negative investor sentiment drove the stock weakness with comments and questions including: 'it can't get better', 'has Apple peaked?', and 'is growth slowing?' similar to ones we are hearing today."
"We believe the answers to these questions remain the same and it is that Apple has yet to see its best," Wu added.
Over the next 12-24 months, the analyst expects to see a Mac upgrade cycle of Intel Macs, continued penetration of iPod+iTunes in digital music and video, and an extension of both the Mac and iPod+iTunes franchises into new business areas such as home entertainment servers, cell phones, and other consumer electronics.
"We view this as a great opportunity to take advantage of this lull period to build or add to Apple positions," Wu said. "We believe a key metric to watch remains its progress in transitioning to Intel processors."
Gene Munster, an analyst for PiperJaffray, offered similar sentiments on Tuesday.
"We believe the stock has sold off primarily based on investor perception regarding the potential for an air pocket in growth over the next 1-2 quarters due to the Intel transition," Munster wrote in a research note obtained by AppleInsider. "Many investors are concerned that growth from existing Macs will slow as customers wait for new Macs and many also anticipate that the transition will be drawn out on the professional side by a lack of readiness from major software vendors such as Quark, Microsoft, and Adobe."
The analyst argues that Apple has, and will continue to have, various growth curves in different parts of its business that sometimes may not be in sync with eachother. "To look at a potential short-term trough in these curves and extrapolate the business based on this period is short-sighted in our minds," he said.
In support of his beliefs, Munster pointed out how a lot of investors were originally concerned about Apple's transition from the iPod mini to the iPod nano. However, with the addition of the video iPod, the company was able to align two growth curves that ultimately generated massive unit volume increases post-mini, he said.
Similarly, investors are concerned about a slowdown entering the Intel transition, Munster said. "We believe a slight air pocket is inevitable in front of all new product releases, but this scenario is factored into Mac estimates and we do not believe the transition will lead to Apple missing numbers."
Just like Wu, Munster agrees that Apple shares should inevitably reposition themselves.
"We see now as the time to get positioned for the next peak as Apple's various growth curves get closer to aligning themselves again," he wrote.
Apple shares have fallen over 20 percent in less than three weeks. The stock was trading up 39 cents, or 0.58 percent, at press time.
Comments
It's amazing how much Kool-Aid he has consumed since last summer. Now he's even predicting that Apple will have a "special media event in the next few months", which means he really doesn't know but just needs to say something to justify his target. Of course since he says "few months" which could stretch all the way to October, he's almost assured of getting it right.
(I'm pro-Apple but this guy just gets on my nerves.)
Originally posted by mark2005
Now he's even predicting that Apple will have a "special media event in the next few months", which means he really doesn't know but just needs to say something to justify his target. Of course since he says "few months" which could stretch all the way to October, he's almost assured of getting it right.
For a few months last year, it seemed they had a special media event about once a month.
Originally posted by mark2005
Shaw Wu should know best what those negative sentiment questions were. He was the one asking them and answering them with "Don't buy Apple." (Don't know if he said sell but I know he was no better than hold until he'd missed most of the uptrend in 2005.)
It's amazing how much Kool-Aid he has consumed since last summer. Now he's even predicting that Apple will have a "special media event in the next few months", which means he really doesn't know but just needs to say something to justify his target. Of course since he says "few months" which could stretch all the way to October, he's almost assured of getting it right.
(I'm pro-Apple but this guy just gets on my nerves.)
Wu was always one of the most conservative analysts. He's changed his position.
I bought more a week ago, but it dropped a few points afterwards.
The overall poor showing of technology stocks have dragged Apple down with them. I certainly didn't expect the slew of poor earnings and sales from all of these companies. I thought that with an average market, Apple would be sitting at about 78-82 right now.
But, I'm not concerned. Disappointed, yes.
Originally posted by mark2005
Shaw Wu should know best what those negative sentiment questions were. He was the one asking them and answering them with "Don't buy Apple." (Don't know if he said sell but I know he was no better than hold until he'd missed most of the uptrend in 2005.)
It's amazing how much Kool-Aid he has consumed since last summer. Now he's even predicting that Apple will have a "special media event in the next few months", which means he really doesn't know but just needs to say something to justify his target. Of course since he says "few months" which could stretch all the way to October, he's almost assured of getting it right.
(I'm pro-Apple but this guy just gets on my nerves.)
I wonder if Shaw increased his holding significantly. That could explain his changed attitude at this time. I take anything these fools say with a grain of salt.
Wu is also upbeat about iTMS and about the increase in the number of songs downloaded from iTMS/iPod. Once the 5-year olds now are old enough to buy music, they are going to do it online, because they don't have 15 years of CD's to rip. Thus iTMS will increase in its relevance.
Now if Apple can just get Front Row to work right and get it into a home entertainment box and get a subnotebook and open up the iPod to 3rd party s/w developers, it will have tons of growth curves all balancing each other out and the ecosystem will be complete and stable!