Why Are Analysts Such Wet Blankets About Apple’s Future?

Why Are Analysts Such Wet Blankets About Apple’s Future?

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Wall Street analysts can be an odd sort. Apple is seen as a red hot company producing must-have products, yet many observers of the Cupertino, Calif. tech giant are downright wet blankets when it comes to Apple’s future. Monday, a fellow analyst said pessimists predicting Apple will grow -2 percent must live in some alternate universe where up is down and iPhones don’t sell.

To achieve -2 percent growth, the iPhone market share would need to fall by 75 percent over the next three years, Apple shedding most of its 116 million handsets expected to sell between 2012 and 2015, Bernstein analyst Toni Sacconaghi told investors. But there could be another bizarro possibility, he said.

Apple, one of the most profitable tech companies ever conceived, could drop overall gross margins from 41.3 percent to 30.9 percent by 2015. Alternatively, the profit on iPhone sales alone could plummet 2,000 points, the analyst envisions.

But neither scenario is remotely close to reality, Sacconaghi reminds us.

“What makes Apple’s valuation truly astonishing to us is that the iPhone and iPad — which together drove 87 percent of its revenue growth and an estimated 91 percent profit last year — are exposed to secular tailwinds,” the analyst writes. In other words, both key Apple products are as extremely profitable and demand remains high.

Wall Street analysts can be an odd sort.

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  • volodoscope

    The reason Wall Street is so scared of Apple is because they have no idea what Apple is doing or planning to do. It’s Apple’s own secrecy that they don’t like.

  • Eric Seif

    Another analyst (Ticonderoga) came out yesterday and said they had their best November ever and “it would be tough to bet against them for the holiday season.”  They have a $666.00 price target and a BUY rating.

  • AlterThending

    I just wanna know how that laptop is staying on the table I believe Steve Jobs is holding it. 

  • taylerz

    Exactly. The stock market is, unfortunately, based on future, not past, performance. However, several analysts agree a “massive Apple upside correction” is increasingly due based on its *current* depressed valuation.

    Whatever the analysts are saying, Apple has a significant bite of the pie (current marketshare) and has nowhere to go but up (current competition).

  • 300AShareMakesMeSmile

    I think these complaints about why Apple shares aren’t higher are getting a bit annoying.  Apple has no interest in making individual shareholders rich.  The company’s only concern is how to build and sell high-quality products that consumers enjoy.  The rest takes care of itself.  I would figure most of you would know by now that Wall Street is run by gamblers and crooks.  Institutions such as JPMorgan and Goldman Sachs are some of the worst offenders.  The people running these banks are liars and thieves and cheating their own employees.  They have analysts downgrading other companies when their own company is going down the tubes due to gross mismanagement of their own funds.

    Just awhile ago, MF Global collapsed and found that $1.6 million dollars had disappeared.  Do you think these sorts of crooks are going to be fair about anything that’s actually successful?  These people make a living out of making crap companies appear like they’re great and betting heavily on them to keep them afloat.  These charlatans hate to see truly honest companies become successful because they’re harder to manipulate.  Take for instance, Netflix and Green Mountain Roasters.  They turned these flaky stocks into high fliers only to let them crash and burn when they couldn’t make the future revenue they were hyped to do.  It’s just plain dishonesty and likely hurting many trusting, individual investors.

    Apple’s stock may be lagging, but at least the company itself is in great shape.  $82 billion dollars in cash hoard will be able to cover up any mistakes along the way.  Apple isn’t going out of business overnight.  Don’t blame Apple management for a lagging stock.  Blame the liars, crooks and criminals running Wall Street.  Forget those high target prices for Apple.  I’m sorry, but I doubt such a high share price will ever happen in Apple’s future.  Wall Street will continue to beat Apple shares down, no matter what.

  • 300AShareMakesMeSmile

    Apple will continue to climb, but the share price won’t.  Apple controls its products.  Wall Street controls Apple’s share price.

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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