Apple stock drop seen as latest buying opportunity
Tuesday's sharp decline in Apple's share price is just the latest opportunity for investors to buy into or increase their positions in the multi-faceted electronics company, say analysts at investment bank Piper Jaffray.
Company shares remained down $17.44 or 11.21 percent to $138.20 in pre-market trading following the firm's fiscal first quarter earnings report and guidance, which combined to spook investors who fear the gadget maker may not be able to maintain its momentum given evidence of a faltering macro economy.
Sentiment was particularly soured by the company's March quarter guidance, which came in 15 percent below Wall Street's expectation. Year-over-year iPod growth also slowed considerably, coming in at just 5 percent compared to 50 percent for the same period last year.
But in a research note to clients Wednesday morning, analyst Gene Munster said he believes investors are overreacting to the fiscal report and outlook, even given the fact that iPod sales are indeed decelerating.
"Over the last 7 quarters, on average, Apple has guided earnings-per-share (EPS) 9 percent below Street expectations," he wrote. "While the March quarter EPS guidance is more conservative than average, Apple's revenue guidance for the quarter is [only] 2 percent below Street expectations, vs. an average of 4 percent below expectations over the last 7 quarters."
The analyst also pointed out that decelerating iPod sales are nothing new, as slowing growth of the media players has been evident every quarter since the June 2005 quarter with the exception of three-month period ending December 2006. This deceleration, however, has been offset by year-over-year Mac growth rates which have been on the up-and-up, he explained.
"Mac market share continues to rise, and growth rates are accelerating," Munster advised clients. "Using IDC estimates, Mac market share in December 07 was 3.0 percent, or 50 basis points higher than in December 06, [which represents] the largest gain in Mac market share since we began tracking IDC data seven quarters ago."
Furthermore, the Piper Jaffray analyst noted that Tuesday's approximate 15 percent drop in Apple's stock price means shares are now trading at just 25 times the company's expected per-share earnings over the next twelve months, down from a two-year average of 31 times and a two-year low of 24 times.
Munster, who previously placed Apple on his firm's Alpha list, maintained his Buy rating and $250 price target on shares of the company.
Company shares remained down $17.44 or 11.21 percent to $138.20 in pre-market trading following the firm's fiscal first quarter earnings report and guidance, which combined to spook investors who fear the gadget maker may not be able to maintain its momentum given evidence of a faltering macro economy.
Sentiment was particularly soured by the company's March quarter guidance, which came in 15 percent below Wall Street's expectation. Year-over-year iPod growth also slowed considerably, coming in at just 5 percent compared to 50 percent for the same period last year.
But in a research note to clients Wednesday morning, analyst Gene Munster said he believes investors are overreacting to the fiscal report and outlook, even given the fact that iPod sales are indeed decelerating.
"Over the last 7 quarters, on average, Apple has guided earnings-per-share (EPS) 9 percent below Street expectations," he wrote. "While the March quarter EPS guidance is more conservative than average, Apple's revenue guidance for the quarter is [only] 2 percent below Street expectations, vs. an average of 4 percent below expectations over the last 7 quarters."
The analyst also pointed out that decelerating iPod sales are nothing new, as slowing growth of the media players has been evident every quarter since the June 2005 quarter with the exception of three-month period ending December 2006. This deceleration, however, has been offset by year-over-year Mac growth rates which have been on the up-and-up, he explained.
"Mac market share continues to rise, and growth rates are accelerating," Munster advised clients. "Using IDC estimates, Mac market share in December 07 was 3.0 percent, or 50 basis points higher than in December 06, [which represents] the largest gain in Mac market share since we began tracking IDC data seven quarters ago."
Furthermore, the Piper Jaffray analyst noted that Tuesday's approximate 15 percent drop in Apple's stock price means shares are now trading at just 25 times the company's expected per-share earnings over the next twelve months, down from a two-year average of 31 times and a two-year low of 24 times.
Munster, who previously placed Apple on his firm's Alpha list, maintained his Buy rating and $250 price target on shares of the company.
Comments
(For the record, I did get in at $138; time will tell, but I am quite optimistic).
Anyone have disclosure on Piper Jaffray's holdings? What is their stake in AAPL?
"Research Disclosures
Piper Jaffray was making a market in the securities of Apple, Inc. at the time this research report was published. Piper Jaffray will buy and sell Apple, Inc.
securities on a principal basis."
Then we shoot forward to the days of growth when Apple will add 5 colors to the new iMac lineup, and they add their first ever 14" PowerBook (I bought one). Then the iPod. Yeah, stock prices increased. But more importantly Apple kept inventing, just as always.
Don't worry folks, Apple's still inventing.
Anyone have disclosure on Piper Jaffray's holdings? What is their stake in AAPL?
I don't think it is a 13F holding for Piper Jaffray. But you can look it up in SEC's EDGAR?
You can flame me later but....I have read AI for many years but it really seems to me that the sight has gone from good reporting to being a mindless cheerleader for Apple. Is there any objective reporting left? Look back and see just how many articles swoon over anything Apple and ignore any problems. Either they are caught in Steve's distortion field or they have become the newest fanboy PR firm for Apple.
HELLO?
Anyone have disclosure on Piper Jaffray's holdings? What is their stake in AAPL?
If the stock is down, they advise you to buy.
If the stock is up, they advise you to buy.
hmm, seems like they are looking for a sucker. Is everyone qualified?
Take all your money, give it to a stranger, who promises to make you rich.
If the system works as they claim, they why would they want your money? They could be compounding their own money instead.
How is it that every new generation gets suckered into this ponzi scheme?
Apple is doing well making and selling machines, but like every other company, the stock valuation fraud can kill them eventually. There is no such thing as a free lunch. What goes around comes around. Don't be a sucker. Get out if you are in, stay out if you are out.
I'd take your "get out and stay out" advice more seriously if I hadn't already made so much buying AAPL...
Me too
I'm not liking what I see now, but I got my shares at around $7.00 per share years ago, and yes, even though it's not looking real good today, I'm still making a ton of bucks
Skip
I'd take your "get out and stay out" advice more seriously if I hadn't already made so much buying AAPL...
You can't keep winning forever. Like a casino, the house always wins. And eventually the casinos go under because the cost of doing business is always more than the profits they can collect.
It's a ponzi scheme, that creates inflation, and is a waste of resources. It's lose-lose-lose all around.
You'll see. :-)
But then, you sound like you are already addicted. If you lose, that will be your rational for playing more. If you win, that will be your justification to keep playing.
Keep working and putting your paycheck into the ponzi scheme. The ponzi-masters are counting on you and people like you, just like a drug dealer needs a junkie.
Back to the old days when Apple was just a company whose computers people remember using in school 'back in the day'. The days of the Classic and the Lisa. Back before the i-anything. Back when people believed in Apple because they loved using their products; not because of their hefty stock price. Remember? This was all before Apple's popularity, yet the dedicated few were just that -- dedicated.
Then we shoot forward to the days of growth when Apple will add 5 colors to the new iMac lineup, and they add their first ever 14" PowerBook (I bought one). Then the iPod. Yeah, stock prices increased. But more importantly Apple kept inventing, just as always.
Don't worry folks, Apple's still inventing.
I agree with you on many of your points (since you come from the days that I have), but I also believe that Apple is now focused too much on one person: Steve Jobs. Back then this was not the case. The reality is that many other corporations are still inventing too.
You can flame me later but....I have read AI for many years but it really seems to me that the sight has gone from good reporting to being a mindless cheerleader for Apple. Is there any objective reporting left? Look back and see just how many articles swoon over anything Apple and ignore any problems. Either they are caught in Steve's distortion field or they have become the newest fanboy PR firm for Apple.
I thoroughly enjoy AppleInsider, but I agree with you. I become excited with Apple's actual products, and not on waiting for Steve Jobs to give a dog and pony show on new products. How many other employees are there at Apple? One: Steve Jobs. You want to see Apple's stock seriously tumble? Easy, Steve Jobs meets with an untimely fate. Apple products have become so linked to Jobs that you cannot separate the two; for investment reasons this is a very bad aspect. Take a look at how IBM runs matters...it is a completely different story, but I will bet that IBM has a better chance of being around a century from now than Apple. What is Apple's succession plan for Jobs, and more importantly Apple?
Me too
I'm not liking what I see now, but I got my shares at around $7.00 per share years ago, and yes, even though it's not looking real good today, I'm still making a ton of bucks
Skip
true, I'm currently very miffed about the situation. But it would ultimately take world war three for me to make a loss on Apple overall.
You can't keep winning forever. Like a casino, the house always wins. And eventually the casinos go under because the cost of doing business is always more than the profits they can collect.
Wow, you really are clueless about investing. And casinos for that matter.
If you look at long term investing, stocks in companies overall have gone up for decades. Sure, there have been periods of time that have been down. And sure, not all companies do well and go up.
But to insist that investing in the stock market inevitably leads to losses, is absolutely laughable. Decades of investment history, and thousands of people who have made profits from investing prove that wrong.
I will keep investing in the stock market, and I will keep making profits over the long haul as I have so far. The dumbest thing you can do is to sit on your savings in low-yield "safe" investments that barely keep up with inflation.
But if you want to believe that there's an anomaly ahead that has no precedent in the decades the stock market has existed, go right ahead. But don't be surprised when I'm laughing at you.
And as for the casinos, while some go out of business here and there, there are a huge number that are making tons of money. Your statement isn't even consistent...the casino always wins (which is true) but it's impossible to stay in business?
http://finance.yahoo.com/q/bc?t=my&s...q=l&c=mgm+wynn
true, I'm currently very miffed about the situation. But it would ultimately take world war three for me to make a loss on Apple overall.
Actually, it probably wouldn't make any change in the long run. Seeing as creating all the stuff needed for war makes jobs (eg WWII and the depression before it)
You can deny the historical pattern of boom and bust, but it will raise you up and crush you just the same.
At best, you survive, and it is even worse for your kids.
Of course, everybody is surviving wonderfully during the boom. They think it will last forever. Using statistics that say the numbers are good are meaningless, since they only show a part of the cycle.
It's more like the Monopoly game. At the beginning everyone is booming, at the end everyone is bankrupt.
Perhaps Orwell missed one of the precepts of doublethink:
Competition is Cooperation.
People obviously embrace 2+2=5. :-)
The stock is down: Buy more!
The stock is up: Buy more!
Don't sell your stock, Buy more!
Buy More! Buy More! Buy More!
ROTFLMAO. How absurd.