UBS, PJ, CG, BS, GS, TE, AmTech all up Apple target, stock falls
Shares of Apple Inc. fell more than 3 percent in pre-market trading on Thursday as concerns over the company's outlook and Mac sales momentum outweighed simultaneous price target upgrades by nearly a dozen Wall Street firms.
During its fiscal first quarter of 2007, the Cupertino-based Mac maker said it sold 1.606 million systems, about 150,000 to 300,000 units less than most analysts had been anticipating.
For Apple, the 1.6 million unit total also represented a slight but uncharacteristic sequential decline between its fourth and first fiscal quarters. By comparison, Apple during its fourth quarter ended September sold a total of 1.610 million Macs.
Of similar concern to investors was the company's guidance for its second fiscal quarter of 2007 ending March, which came in soft at 54 cents to 56 cents per-share earnings on revenues of $4.8 billion to $4.9 billion.
"Management tends to guide conservatively, but we believe that as Apple becomes more of a consumer electronics company, we will see greater quarterly fluctuations between the quarters due to stronger and stronger holiday sales," said Ingrid Ebeling of JPM Securities, who took a different approach than most analysts on Thursday in downgrading shares of the company from a "Strong Buy" to "Market Outperform."
Meanwhile, analysts at nearly a dozen other firms looked past the Mac target miss and conservative guidance in upgrading their price target on shares of Apple.
"We maintain our Buy rating as we believe Apple is morphing into a four-prong vertically integrated play," said American Technology Research analyst Shaw Wu, who upped his price target on the company to $115 from $99. "We see several catalysts in the quarters ahead, including Mac OS X Leopard, new movie and carrier partners, lower cost cell phones, and further extension of its core technology franchise into new business areas."
A summary of other firms that increased their target on Apple follow:
Soleil -- to $115 from $100
Goldman Sachs -- to $110 from $102
Bear Stearns -- to $130 from $125
Prudential -- to $100 from $90
PiperJaffray -- to $124 from $99
UBS -- to $124 from $118
Citigroup -- to $105 from $98
ThinkEquity -- to $120 from $110
Shares of Apple were trading down $3.26 or 3.43 percent to $91.69 in early morning trading on the Nasdaq stock market.
During its fiscal first quarter of 2007, the Cupertino-based Mac maker said it sold 1.606 million systems, about 150,000 to 300,000 units less than most analysts had been anticipating.
For Apple, the 1.6 million unit total also represented a slight but uncharacteristic sequential decline between its fourth and first fiscal quarters. By comparison, Apple during its fourth quarter ended September sold a total of 1.610 million Macs.
Of similar concern to investors was the company's guidance for its second fiscal quarter of 2007 ending March, which came in soft at 54 cents to 56 cents per-share earnings on revenues of $4.8 billion to $4.9 billion.
"Management tends to guide conservatively, but we believe that as Apple becomes more of a consumer electronics company, we will see greater quarterly fluctuations between the quarters due to stronger and stronger holiday sales," said Ingrid Ebeling of JPM Securities, who took a different approach than most analysts on Thursday in downgrading shares of the company from a "Strong Buy" to "Market Outperform."
Meanwhile, analysts at nearly a dozen other firms looked past the Mac target miss and conservative guidance in upgrading their price target on shares of Apple.
"We maintain our Buy rating as we believe Apple is morphing into a four-prong vertically integrated play," said American Technology Research analyst Shaw Wu, who upped his price target on the company to $115 from $99. "We see several catalysts in the quarters ahead, including Mac OS X Leopard, new movie and carrier partners, lower cost cell phones, and further extension of its core technology franchise into new business areas."
A summary of other firms that increased their target on Apple follow:
Soleil -- to $115 from $100
Goldman Sachs -- to $110 from $102
Bear Stearns -- to $130 from $125
Prudential -- to $100 from $90
PiperJaffray -- to $124 from $99
UBS -- to $124 from $118
Citigroup -- to $105 from $98
ThinkEquity -- to $120 from $110
Shares of Apple were trading down $3.26 or 3.43 percent to $91.69 in early morning trading on the Nasdaq stock market.
Comments
Say they had MISSED earnings this quarter, but predicted a great quarter coming up. That would have killed the price.
The problem with stock market pundits is they always try to over simplify and point to ONE thing that is the catalyst. Capitalism is not that simple.
When people say "stock plummets", I think people forget the 10 points or so the stock increased just prior to the quarterly results. The stock really didn't plummet, it just increased a little less than it really should have.
True and many AAPL buyers are the same sheep that bought an 'investment property' in 06. Blindly follow what they think is a quick get rich idea. They don't actually study the company in question.
I also think some of them believe everything they hear from 'experts' ... could some of the 'expert's' negative comments about Apple in such places as CNN Money be anything to do with the Apple - AT & T alliance ... Perhaps Time Warner have a conflict here?
Almost seems that the stock is priced so high that folks want it to come down regardless of how good the news is. Really stupid article making the rounds of all the networks stating that iPod growth is slowing down. Duh. Of course it can't grow at 500% forever. But the scary headlines are very popular today.
I wonder if its an overreaction to lower guidance or if there's something real to it. I have my own doubts regarding the iPhone and Apple TV. Neither are as good as I expected. That makes me worry. Earnings sounded awesome.
Regarding Macs, sounds they're being a little greedy not dropping prices. Their margins were up, yet no price drop. They need to volume to gain marketshare so that there will be more software written for the Mac.
I'll never claim to understand the stock market.
Say they had MISSED earnings this quarter, but predicted a great quarter coming up. That would have killed the price.
The problem with stock market pundits is they always try to over simplify and point to ONE thing that is the catalyst. Capitalism is not that simple.
The problem with stock market pundits is that if they have an above average track record in predicting stock movements, they'd be keeping their predictions to themselves and be making billions of dollars in the stock market.
The fact that they're blabbing their 'knowledge' out loud means that their guesses are just as good as yours and mine, and they're making their money on the backs of gullible people who don't realize this.
Regarding Macs, sounds they're being a little greedy not dropping prices. Their margins were up, yet no price drop. They need to volume to gain marketshare so that there will be more software written for the Mac.
I was a little surprised how high their margins were as well. A big part of that is the strength of the MBP family, so they had a higher average selling price than planned.
While I am disappointed about the Mac unit numbers, I don't think price was a determining factor. The market overall hasn't grown much over the past 3 months, and that appears to be the biggest issue. Japan was disappointing, but no surprise-- they don't have any mac products that are really compelling for the Japanese market, and they are losing ground with a few market segments.
So, the question becomes-- do they introduce more models to appeal to a wider audience, or do they diversify out of the computer business. I think the winning business strategy is to diversify with compelling products with similar appeal to their macs. At the same time, as a Mac user, I really hope they do work to come out with a slate tablet, an ultralight laptop, and maybe even a mid-range tower. To pull it off, though, they need to keep products from cannibalizing sales of other lines, and make sure that they actually see ~20% growth in unit sales through that type of initiative.
All that said, the real weakness is in the Pro sector, so once CS3 and Office 2007 come out I imagine there will be a significant spike due to pent-up demand. Hopefully they bump the machines in features at the same time.
It is counter intuitive. They destroyed earnings estimates. iPod sales were way beyond anyones estimates. Tons of upgrades. Yet the stock falls.
Almost seems that the stock is priced so high that folks want it to come down regardless of how good the news is. Really stupid article making the rounds of all the networks stating that iPod growth is slowing down. Duh. Of course it can't grow at 500% forever. But the scary headlines are very popular today.
Apple's stock price went up 10 points or so in the last 4 weeks. Why? Because of all the rumors of the iPhone, plus speculation on the last quarter, etc. If you were thinking Apple was going to make 1.3 billion last quarter, and they ended up making on 1 billion, you'd sell to. Don't pay ANY attention to analysts estimates, as they are generally conservative (as our a company's forecasts). But its the whisper numbers (what they really, really think and hope) that people end up buying for.
And lest we forget the old mantra, "Buy on bad news, sell on good news".
As for the headline, its perfectly reasonable and true. Why is it stupid? Just because you think its inflamatory? Apple's stock price is based on what people think it will be doing in the future (its priced magnitudes higher than its actual worth in terms of assets). If iPod growth starts to wane, then there's less potential growth for the stock, so there's no reason it should be priced beyond its value the way it is.
I wonder if its an overreaction to lower guidance or if there's something real to it. I have my own doubts regarding the iPhone and Apple TV. Neither are as good as I expected. That makes me worry. Earnings sounded awesome.
Once earnings are released, everyone looks to the future. You don't rest on your laurels. You can't say "Apple made a billion dollars in December, so its price should be xxx" because its not about what it did, its what its going to do. Otherwise Dell and MS would still be skyrocketing, because they made billions in the past.
But also keep in mind one important thing. As stated earlier, the price was shooting up from the beginning of the year, most likely on the rumors of the iPhone. Though the rumor became reality, there's several issues with it:
- Questions on its functionality and durability
- Cingular? Cingular?
- What do you mean "Not until June?"
The price spike was looking forward to early returns on an iPhone extravaganza. Instead they got the usual Apple "well, hopefully it'll still have a 'wow' factor come summer, if we can find anyone willing to spend the $$$ and switch to Cingular just to use it".Regarding Macs, sounds they're being a little greedy not dropping prices. Their margins were up, yet no price drop. They need to volume to gain marketshare so that there will be more software written for the Mac.
Apple doesn't change their prices based off of reduced material cost or anything. Apple lives by the fact that they sell high-priced computers. They don't want to be seen as another Dell. Lower prices are not their forte (I think they lost the 'subtract' button from their calculators). Instead, they'll come out with updates that include some semi-useless feature to most people and hawk it as some new cool addition that everyone needs, just so the price of the computer stays what it is (for example, adding iSights to all computer models, because EVERYONE needs web cams on their computers!)
Really stupid article making the rounds of all the networks stating that iPod growth is slowing down. Duh. Of course it can't grow at 500% forever. But the scary headlines are very popular today.
Exactly, iPod growth CAN'T grow at 500% forever, and neither can the stock.. Current iPod sales are already built into the P/E ratio of AAPL.. The reason we have seen such momentuous gains in AAPL over the last several years is largely in part to the fact that iPod growth was in the 100% to 600% range. iPod may be nearing market saturation so even though sales are stronger than they've ever been, the growth rate has slowed down.. So naturally, the stock may do the same.
I think part of the dip today is because analysts realize iPod growth is slowing and were putting more emphasis on the Mac showing bigger growth gains.. 1.6 million Mac shipments is good, but as the article said, it's about 150,000 to 300,000 units shy of what some had expected and/or hoped for.
Of course AAPL is not stagnating by any means, In addition to the Mac and iPod, they have created an enitirely new platform and growth engine with the iPhone, which just may end up repeating the iPods success... Time will tell..
Anyway you look at it, Wall Street is primarily concerned about growth.. There is a direct corrolation between growth rate and stock price.
1) Leopard
2) iPhone (halo 2.0)
3) "smart" iPod(widescreen touch-enabled)
4) Adobe Creative Suite 3
5) iLife, iWork & .Mac 2007
Mac sales are slowing because Mac users are waiting for Leopard.
The percentage of switchers has been rising dramatically because they want a new mac now!
Apple's existing consumer user-base is waiting for Leopard and iLife 2007.
Apple's existing professional user-base is waiting for Leopard and Adobe Creative Suite 3.
The new "smart" iPod will appeal to those who want an iPhone but are locked into a contract with another provider or are price sensitive.
You have to be pretty dense to not see that the "perfect storm" is brewing!
1) Leopard
2) iPhone (halo 2.0)
3) "smart" iPod(widescreen touch-enabled)
4) Adobe Creative Suite 3
5) iLife, iWork & .Mac 2007
Mac sales are slowing because Mac users are waiting for Leopard.
The percentage of switchers has been rising dramatically because they want a new mac now!
Apple's existing consumer user-base is waiting for Leopard and iLife 2007.
Apple's existing professional user-base is waiting for Leopard and Adobe Creative Suite 3.
The new "smart" iPod will appeal to those who want an iPhone but are locked into a contract with another provider or are price sensitive.
Bingo Bingo Bango. !!!11!! 8) ... I'd say anyone that doesn't have AAPL or has space for MORE AAPL should get in on $88 (as it is now) or maybe $85 if it slides some more. We're looking at $100 anytime between now and June/July of this year. That's a 15% gain for anytime between 1 week to 6 months.