Piper shaves Apple estimates, sees slower Mac growth

Posted:
in General Discussion edited January 2014
Investment bank Piper Jaffray said Thursday that weakness in consumer spending will bite into PC sales next year, including Apple's, leading the firm to cut its 2009 sales estimates for the Mac maker along with the broader market.



Although there's no evidence to suggest that Mac sales have slowed thus far, analyst Gene Munster cited "low visibility" into next year's environment as reason to adopt a conservative approach and model Mac sales growth to drop from 43% year-over-year in 2008 to 10% year-over-year in 2009.



"The primary reason for our universe-wide estimate cuts is that the economic and consumer spending outlook has deteriorated significantly over the last month, which we expect to continue through 2009," he wrote in a note to clients.



Apple has seen its Mac sales grow at approximately 2.5 times the industry average for the better part of this year, but that rate is likely to contract to approximately 2 times the industry average next year, the analyst added.



As such, Munster reduced his 2009 calendar year revenue estimate on the Cupertino-based company by 5%, modeling overall revenues to be up approximately 25% for the year compared to his previous estimate of 32%.



"Our reduction is primarily driven by macroeconomic headwinds causing overall PC sales to grow at about 5% year-over-year in 2909," he wrote. "We believe Macs will continue to gain share, but we are reducing our year-over-year growth to 10%, down from 16% previously."



Specifically, the analyst expects Apple to generate 2009 calendar year revenues of $41.22 billion on sales of 11 million Macs, 45 million iPhones, and 41.2 million iPods.



He continues to recommend that investors Buy shares of Apple, but lowered his 12-month price target from $250 to $235.
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Comments

  • Reply 1 of 30
    richlrichl Posts: 2,213member
    Quote:
    Originally Posted by AppleInsider View Post


    He continues to recommend that investors Buy shares of Apple, but lowered his 12-month price target from $250 to $235.







    In order to make it to $235 in 12 months, Apple would not only have to continue to post such great results but the rest of the stock market would need to recover. Apple's share price doesn't exist in isolation.



    Someone buy this man a book on economics, please.
  • Reply 2 of 30
    Quote:
    Originally Posted by AppleInsider View Post


    Our reduction is primarily driven by macroeconomic headwinds causing overall PC sales to grow at about 5% year-over-year in 2909



    That's some pretty far-seeing reporting
  • Reply 3 of 30
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by RichL View Post






    In order to make it to $235 in 12 months, Apple would not only have to continue to post such great results but the rest of the stock market would need to recover. Apple's share price doesn't exist in isolation.



    Someone buy this man a book on economics, please.



    I'm sure he's aware of that. Do you think there's no possibility of a market recovery in the next year? The market does tend to lead the economy, you know. Anyway, I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery. When it comes, it will be explosive...
  • Reply 4 of 30
    Quote:
    Originally Posted by cameronj View Post


    I'm sure he's aware of that. Do you think there's no possibility of a market recovery in the next year? The market does tend to lead the economy, you know. Anyway, I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery. When it comes, it will be explosive...



    I agree, when it comes whooooosh!



    My guesstimate is $130 by macworld (is going to be like bucking bronko round that date for sure) and $190 12 months.



    Disclaimer: never listen to a man of ill repute
  • Reply 5 of 30
    richlrichl Posts: 2,213member
    Quote:
    Originally Posted by cameronj View Post


    I'm sure he's aware of that. Do you think there's no possibility of a market recovery in the next year? The market does tend to lead the economy, you know. Anyway, I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery. When it comes, it will be explosive...



    The market wouldn't just have to recover, it would need to reach significantly above its previous height.



    Personally, I don't think it will recover that fast. We're in some serious long term trouble here. It's not just the tech sector that has been hit this time.
  • Reply 6 of 30
    More importantly, Gene is one of the biggest apple bulls out there, so for him to say what he did...it carries some weight. he also had that 250 target for a longgg time, but finally lowered it...
  • Reply 7 of 30
    'Universe-wide' ? So these analysts know about the recession on Tau Ceti Prime as well ? Impressive.
  • Reply 8 of 30
    I really cant see any slowdown in growth. Even if mac sales are to slow, growth in other areas will keep the whole machine growing steady. In-fact if Apple release another iphone, they could probably scrap the rest of the business and still see growth!



    Anyway, so all this time, apple is growing, but the share price shrinking due to (fears in) the wider economy. Also at the same time Apple is expanding into vast pools of foreign markets who are becoming increasingly wealthy.

    So when the confidence returns I see no other outcome than whooosh (like a rat out of an aqueduct).
  • Reply 9 of 30
    tbagginstbaggins Posts: 2,306member
    Gene is just not inspiring confidence with his wildly optimistic predictions. So NOW he finally sees 2009 as being a tough year (mega-duh there), and lowers his target price all the way down to $235. Re-he-healllly, Gene? Ya honestly think so?



    Look, Apple is indeed a great buy at it's current $90 or so, but if you're buying it expecting it to hit $235 in the next 12 months, you are on nearly as much crack as the Genester.



    Stay in school, don't do drugs, and don't listen to analysts who apparently failed to heed those two pieces of advice.





    ...
  • Reply 10 of 30
    Quote:
    Originally Posted by TBaggins View Post


    Stay in school, don't do drugs, and don't listen to stock analysts who apparently failed to heed those two pieces of advice.



    ...



    What like Steve Jobs did you mean? Remember, the company is founded on Drugs and Slackers
  • Reply 11 of 30
    tbagginstbaggins Posts: 2,306member
    Quote:
    Originally Posted by monstrosity View Post


    What like Steve Jobs did you mean? Remember, the company is founded on Drugs and Slackers



    Great point, actually.





    ...
  • Reply 12 of 30
    Quote:
    Originally Posted by cameronj View Post


    I'm sure he's aware of that. Do you think there's no possibility of a market recovery in the next year? The market does tend to lead the economy, you know. Anyway, I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery. When it comes, it will be explosive...



    You realize the massive layoffs by thousands of companies are not slowing down(Globally). Consumer confidence are the lowest in decades. Apple may not have a competition with their advanced products, but the economy crises is one they can't defeat. You realize if the stock hits $70 next month, you could easily be down over 30%. In 1 month.



    Since the stock will be hit hard, what if Apple decides this might be the best time to announce

    Steve's Job future retirement date to start the transition process in the next few years or more. The stock will still take another hit and now you could easily be down over 50% in no time.
  • Reply 13 of 30
    Oh my! Target price lowered from $250 to $230. What is he thinking. This stock is at $95 and may not even see $130 in 12 months. At least hope is still alive in the hearts and minds of the highly optimistic. Unfortunately there are no investors to snap up Apple's risky stock at even bargain rates. HP and IBM are safer bets.
  • Reply 14 of 30
    Quote:
    Originally Posted by cameronj View Post


    I'm sure he's aware of that. Do you think there's no possibility of a market recovery in the next year? The market does tend to lead the economy, you know. Anyway, I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery. When it comes, it will be explosive...



    It's coming...in 2909!
  • Reply 15 of 30
    Quote:
    Originally Posted by Constable Odo View Post


    Oh my! Target price lowered from $250 to $230. What is he thinking. This stock is at $95 and may not even see $130 in 12 months. At least hope is still alive in the hearts and minds of the highly optimistic. Unfortunately there are no investors to snap up Apple's risky stock at even bargain rates. HP and IBM are safer bets.



    It depends though...whether Apple continues to sell/focus into the top of the market (people with jobs and money) who are going to purchase what they want regardless...cause they can. So far Apple has the perceived premier product in PCs, Music Players and cell Phones - and they are missing perhaps the 'TV'/living room product, and anything else they spring on us for 2009. I'm sure Steve has something up his sleeve - how will they tackle a tough market in the next 12-18 months - not just Snow I'm sure.



    It's in places like the upgrade/new PC for 500-800 $ that may see huge drop off (do people really need them?)...like cell phones where iPhone is THE phone to buy and anything else that isn't stellar is starting to drop off...or move people to Apple instead of Nokia / Sony / BB.



    So it's not whether Apple will be impacted in some way with the overall market - it's whether they can continue to have the premier product in a market full of 'others'...right now investors / estimates etc are being realigned with what's really going on in sales - like more Macs than PCs...etc



    If Apple's numbers remain strong and the market shift indicates Apple continues to gain new customers, even in a downturn - it'll be one of few tech stock to own...we'll see.
  • Reply 16 of 30
    Quote:
    Originally Posted by sikras View Post


    You realize the massive layoffs by thousands of companies are not slowing down(Globally). Consumer confidence are the lowest in decades. Apple may not have a competition with their advanced products, but the economy crises is one they can't defeat. You realize if the stock hits $70 next month, you could easily be down over 30%. In 1 month.



    Since the stock will be hit hard, what if Apple decides this might be the best time to announce

    Steve's Job future retirement date to start the transition process in the next few years or more. The stock will still take another hit and now you could easily be down over 50% in no time.



    While Apple is better positioned than any other tech company for continued growth for the next decade(global economic meltdown not withstanding), Wall Street isn't buying because Apple continues to be shrouded in mystery and is far less transparent than any other tech firm. Apple is a double edged sword. Potentially huge profits as they continue to develop innovative products. Potentially huge losses as Steve Jobs departure adds uncertainty to Apple's future.



    The average American has around $10,000 dollars of credit card debt. As companies start laying people off after Christmas, credit cards aren't going to get paid very very soon. Credit card companies and banks are going to be left holding the bill. They in turn will try to squeeze more money out of their paying customers by raising rates. Most people buy computers and electronics with credit cards and that is going to be a lot harder for many Americans in the coming year.
  • Reply 17 of 30
    Quote:
    Originally Posted by RichL View Post


    The market wouldn't just have to recover, it would need to reach significantly above its previous height.



    Personally, I don't think it will recover that fast. We're in some serious long term trouble here. It's not just the tech sector that has been hit this time.



    I don't think the market would need to get above its previous highs as a whole for apple to fly. I mean if you think about it, apple is doing as good or better in most areas as it was a year ago...in this crap economy. So if the economy turns even slightly more positive apple will be one of the stars coming out of the gate.



    My problem is we don't know when this fear and uncertainty will lift enough so people can actually see apple doing well in crappy times and sitting on 25 billion in cash.
  • Reply 18 of 30
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by sikras View Post


    You realize the massive layoffs by thousands of companies are not slowing down(Globally). Consumer confidence are the lowest in decades. Apple may not have a competition with their advanced products, but the economy crises is one they can't defeat. You realize if the stock hits $70 next month, you could easily be down over 30%. In 1 month.



    Since the stock will be hit hard, what if Apple decides this might be the best time to announce

    Steve's Job future retirement date to start the transition process in the next few years or more. The stock will still take another hit and now you could easily be down over 50% in no time.



    What if Jobs retires and the stock is down 70%? What if a bomb is places at headquarters and the stock goes down 90%?



    Clearly you don't understand the idea behind investing - you buy good companies when you think they will go up. You understand the "what ifs" are always possible, and you factor them into your decision making. Clearly, someone who owns the stock right now thinks the odds of being down 30% in a month are slim. Frankly, if I'm down 30% in a month, only as a result of broad economic issues, and not Apple specific issues, I'll be buying more. Will that frustrate you? It sounds from your post like you would be unhappy if I am optimistic about the market. I assume you have your money on the downside, because that's clearly what you believe will happen, right? Or are you too afraid to put your money where your mouth is?
  • Reply 19 of 30
    foo2foo2 Posts: 1,077member
    Apple's previously sky-high valuation was predicated on the opportunity for rapid growth combined with an expected continuation of the company's deft management and execution.

    If the rumor of about 2 months ago is true, that Apple significantly cut its production of iPods going into the holiday season, then the 2nd generation iPod touch shortages might point to a miscalculation on Apple's part. Rumors and their veracity aside, it seems plausible that the economic downturn has pushed some customers who previously had been pondering an iPhone 3G towards the less-expensive option of an iPod touch, thus creating the current shortage. If that's true, then we may see downward pressure on iPhone pricing as its supplies increase.
  • Reply 20 of 30
    bageljoeybageljoey Posts: 1,762member
    Quote:
    Originally Posted by cameronj View Post


    What if Jobs retires and the stock is down 70%? What if a bomb is places at headquarters and the stock goes down 90%?



    Clearly you don't understand the idea behind investing - you buy good companies when you think they will go up. You understand the "what ifs" are always possible, and you factor them into your decision making. Clearly, someone who owns the stock right now thinks the odds of being down 30% in a month are slim. Frankly, if I'm down 30% in a month, only as a result of broad economic issues, and not Apple specific issues, I'll be buying more. Will that frustrate you? It sounds from your post like you would be unhappy if I am optimistic about the market. I assume you have your money on the downside, because that's clearly what you believe will happen, right? Or are you too afraid to put your money where your mouth is?



    While you have a good point, you need to remember what the poster was responding to:

    Quote:

    I've got all my chips pushed to the middle (and every month I'm putting more in) betting on a market recovery.



    That All my chips part raises a red flag. If you are putting everything you got in during a time of insane volitility, well, some good investors could question that strategy.



    Also, you make it sound like we investors have perfect certainty--either we are sure Apple is going up or we should be selling it short. When things are so volitile--with unprecidented market conditions--it is not unreasonable to sit on the sidelines for a while or hold your long investments and wait a bit to see how things are shaking out.



    Thats where I am. If you told me a year ago that AAPL would be at 90 right now (and sales were good and the iPhone was taking off), I would have assumed I would be chompin at the bit to throw more money in. As it is, in this economy I feel it is prudent to have more cash on hand just in case...
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