Caris praises Apple but shares slide on iPhone rumors
Caris & Company on Thursday initiated coverage of Apple Computer with an "Above Average" rating and $100 price target, calling the company a clear "winner in the consumer electronics space."
Shares of the Cupertino, Calif.-based iPod maker reacted favorably to the news in early morning trading but were subsequently dragged down some 3.1 percent to close at $87.04 after an analyst at CIBC speculated that the company's iPhone device would launch later than some had anticipated.
In initiating coverage for Caris, analyst Shebly Seyrafi noted that Apple has two key catalysts for the 2007 fiscal year that are exciting investors and likely to help the company maintain its growth rate over the next few years -- the iPhone and a widescreen iPod. However he also acknowledged some key short-term issues.
Based on a series of checks, the analyst said he does not expect Apple to meet bullish iPod shipment expectations of over 20 million units for the current holiday quarter and is instead modeling for around 16.5 million. He also told clients that he is modeling in front of the seasonally weak first calendar quarter, noting that the company's share price has appreciated by over 80 percent since July -- or more than four times the approximate 20 percent increase in the NASDAQ.
Still, and in support of his Above Average rating, Seyrafi said Apple has "too many positives" going for it long term. Specifically, he pointed out the company's iPod unit share growth -- projected at 41 percent for fiscal 2007 -- and the potential for the iPhone initiative to account for 20 percent or more of the company's revenue within a few years if it can capture 4 percent of the worldwide cell phone market.
Other "positives" cited by Seyrafi include Apple's strong Mac sales and share gains as a result of the iPod "halo effect" as well as its extremely successful retail efforts.
Going forward, the analyst said Apple will need to meet some challenges in order to maintain its success. As some examples, he cited the need to work out acceptable arrangements with wireless carriers for the iPhones, continue its Mac growth in the face of a large Wintel install base and maintain its strong growth rate.
Seyrafi is modeling Apple to become a $38 billion dollar company in fiscal 2008, up nearly fivefold from the $8 billion in sales it generated during 2004.
Shares of the Cupertino, Calif.-based iPod maker reacted favorably to the news in early morning trading but were subsequently dragged down some 3.1 percent to close at $87.04 after an analyst at CIBC speculated that the company's iPhone device would launch later than some had anticipated.
In initiating coverage for Caris, analyst Shebly Seyrafi noted that Apple has two key catalysts for the 2007 fiscal year that are exciting investors and likely to help the company maintain its growth rate over the next few years -- the iPhone and a widescreen iPod. However he also acknowledged some key short-term issues.
Based on a series of checks, the analyst said he does not expect Apple to meet bullish iPod shipment expectations of over 20 million units for the current holiday quarter and is instead modeling for around 16.5 million. He also told clients that he is modeling in front of the seasonally weak first calendar quarter, noting that the company's share price has appreciated by over 80 percent since July -- or more than four times the approximate 20 percent increase in the NASDAQ.
Still, and in support of his Above Average rating, Seyrafi said Apple has "too many positives" going for it long term. Specifically, he pointed out the company's iPod unit share growth -- projected at 41 percent for fiscal 2007 -- and the potential for the iPhone initiative to account for 20 percent or more of the company's revenue within a few years if it can capture 4 percent of the worldwide cell phone market.
Other "positives" cited by Seyrafi include Apple's strong Mac sales and share gains as a result of the iPod "halo effect" as well as its extremely successful retail efforts.
Going forward, the analyst said Apple will need to meet some challenges in order to maintain its success. As some examples, he cited the need to work out acceptable arrangements with wireless carriers for the iPhones, continue its Mac growth in the face of a large Wintel install base and maintain its strong growth rate.
Seyrafi is modeling Apple to become a $38 billion dollar company in fiscal 2008, up nearly fivefold from the $8 billion in sales it generated during 2004.
Comments
I am seeing a much larger number of Macbooks (pro) all over. Consumers, and many professionals, are embracing Apple. While the iPhone will have a significant positive impact on Apple revenue, the market share growth for computers alone will drive the revenues to stockprices justified at $100 or more.
If the recent report that Vista indeed is less secure than Microsoft suggests are true, even more consumers will floc to Macs. I think most Mac sales estimates are conservative, as is the market share is growing. I do think that that the iPod sales estimates are ambitious. If the iTV materializes, this will negate any disappointment in iPod sales. Consumers are starting to want "it just works" which is what Apple can, and does, deliver.
my 2.5 cents.
Applestockholder
1) iPod
2) Leopard
3) iPhone
4) iTV
5) [One more thing...]
The wind is in Apple's sales. This dip in this stock is just that, a dip. Much like the last time the stock started to plummet and everyone got their panties in a bunch, this drop is the result of profit taking by those who know it's going to go up again. They're selling now, because they'll buy big on the upswing. Read: January. Apple is a strong stock, so investors use it to make a quick buck. You can short a stock that you know is strong because you get profit from the downside, and from the upside when you buy again.
Apple will be bigger in 2008. They will be the American Sony (of the 70s and 80s). If I had more money now, I'd sink it all in AAPL.
The wind is in Apple's sales.
groan... (unless your misuse of "sales" was inadvertant)
On a separate note, I think it's funny that the price of AAPL is partly based on the expectation of an Apple phone. Even if such a thing is being worked on by Apple, who's to say that Jobs won't look at the final prototype and say, "nope, not good enough: back to the drawing board!" and we won't see it for another two years. Predicting Jobs must be hell!
Getting more nervous the more analysts agree with each other... very nervous...
I think that very few analysts disagree with the modal view. And those usually tend to be the very young ones (who don't kow any better about the club-iness) or the very old ones (who are past the club-iness).
They are a bunch of lemmings.
Seyrafi is modeling Apple to become a $38 billion dollar company in fiscal 2008, up nearly fivefold from the $8 billion in sales it generated during 2004.
Does anyone know what companies like Microsoft and IBM are currently worth? Just curious to see this $38b figure in perspective....
According to Forbes, MSFT is worth about $45b.... and IBM is worth almost $90b.... wow.
Apple is currently at about $20b....
Coincidence? I don't think so.
-Clive
Woops... sorry for the dumb question, I forgot about that little "google" thing in the upper right hand corner....
According to Forbes, MSFT is worth about $45b.... and IBM is worth almost $90b.... wow.
Apple is currently at about $20b....
That's MSFT's annual revenue. The market value for MSFT is $285B
http://finapps.forbes.com/finapps/js...e.jsp?tkr=MSFT
IBM is $142B
http://finapps.forbes.com/finapps/js...ce.jsp?tkr=ibm
. . . Apple will be bigger in 2008. They will be the American Sony (of the 70s and 80s). If I had more money now, I'd sink it all in AAPL.
I think it has a way to go still. I don't have any money left to invest. About three years ago I got tired of my mutual fund's poor performance, so I pulled everything out and put it all into AAPL, before the split when it was $14.00 a share. I've never regretted that, but my broker calls every so often wondering whether I have thought about diversifying more. So far, I'm not interested.
Seyrafi is modeling Apple to become a $38 billion dollar company in fiscal 2008, up nearly fivefold from the $8 billion in sales it generated during 2004.
Apple is slowly but certainly developing into a behemoth... And we'll need an alternative to be hip again. The iPos is already ubiquitous and has lost it's coolness factor (remember walking around with a 1G or 2G player back in the days?), the iPhone (if it will see the light of the day) will go the same way, 80% of my friends have either a Powerbook, an iBook, a MBP, a MB or an iMac....Wait, maybe that's because their my friends...or the other way around
Nevermind. It's so good to see Apple perform well after years and years of Apple-is-doomed predictions.
And, working in a 90%Win/10%Linux company, having (stupidly enough) accepted the task of internal IT support I clearly know what company my money goes to. And I know where the billions Microsoft makes each year come from. And why there exists a trillion-dollar industry that is today's IT support. But I digress. Move along, nuthin' to see here....
Apple is slowly but certainly developing into a behemoth... And we'll need an alternative to be hip again.
Huh. I never bought Apple products to be "hip", but because they were well designed and functional. Maybe you need to reconsider your priorities if your hipitude is dependent on having consumer electronics that your friends don't own.
Just a thought. ;-)
Huh. I never bought Apple products to be "hip", but because they were well designed and functional. Maybe you need to reconsider your priorities if your hipitude is dependent on having consumer electronics that your friends don't own.
Just a thought. ;-)
I agree and yet, I disagree. It's not about mty friends. It's about the obnoxious teen in the subway or the retarded neighbor that might have an iPod and stuff. Among my friends I'm known to be an early adopter so there's not much to worry about my authority in these matters
Just kidding. I don't care if your grandma and her dog have an iPod. I agree that things just need to work. But I'm also into geekdom. The idea of owning a hacked Zune that runs some other firmware/OS kind of thrills me. Not that I consider buying one. Heaven forbid.
What I imaging is this company had a bunch of pissed of clients asking why they were not invested in Apple this year and Shebly Seyrafi boss said, hey you need to cover apple and make some recommendations to the clients. So what did he do, wait until all the good rumors got out then put out his less then optomistic view, the stock drops like it does every time someone make a down side speculation.
Then he advised his clients to buy since it fell back a bit. and then he looks good since they start making a profit right after he makes the recommendation.
38 Billion? last time i checked, at 87 dollars a share, AAPL is already a 75 Billion dollar company. I see AAPL becoming a 100 Billion dollar company in 2007
He was referring to revenue, not market cap. Apple is a $76 billion dollar company (in market cap), and also a $20 billion dollar company (in sales).
God, I was stupid to sell at $78... Maybe it will dip further and I can re-buy...
Could someone please explain the difference between a stock analyst and a fortuneteller/psychic? Do stock analysts use Tarot cards too? I'd just like to know.
In a way they are exactly that: "Fortune" "Tellers"
They try to tell you where to make a fortune. They do use arcane tools (computer models, maybe even Tarot Cards) to try and predict the future of a stock.
I think you made a very apt comparison