Goldman Downgrades Apple Amid ‘Less Positive’ Outlook
6:56 am, December 15th, 2008, Ed Sutherland
Photo: Cishore/Flickr
Analyst David Bailey told investors Monday shipments of iPhones, iPods and Macs are lower than expected as the company copes with a tighter economy.
As a result, Bailey also cut his target price for Apple shares to $115 from $125.
Bailey said the apparent lack of any new product category for the upcoming January MacWorld 2009 removes “a potential catalyst” for shares, causing “Apple to try to generate demand in a tough environment.”
Despite the short-term challenges, the analyst told clients he believes Apple will remain ahead of competitors.
Bailey’s downgrade follows last week’s target price cut by Morgan Stanley’s Kathryn Huberty. Huberty cut her target price to $95 from $100, citing the weak economy. Along with trimming Apple stock, the analyst also lowered projections for iPhone sales during calendar 2009 to 14 million units, down from 19 million handsets.
Posted by Ed Sutherland in News | Comment on this article
OK… the environment is tough and estimates should come down; however, provided that those estimates were correct and accurately reflected Apples forward earnings. My contention is that they didn’t then and these downgrades completely miss all of the synergies apple has going for it.
Namely,
1. Increasing Itunes and the app store sales including leveraging the current infustructure at higher volumes (improved return on assets).
2. Gift cards for (itunes and app store)
3. ipod-touch higher sales relative to the nano
4. iphone deferred revenue
5. iMac leading laptop market gains
6. Geographic expansion of ipods, macs and iphone
7. ipod gaining US market share
8. ipod higher average selling price
9. ipod-touch increased use as a portable gaming machine
10. Higher sales of accessories related to ipod-touch and iphone.
11. Lower reliance on ipods as a growth driver including lower reliance on ipod shuffle both of which carry lower gross margin.
12. Lower capital expenditures to roll out iphone, new ipods and new products.
13. Lower component and distribution cost do to recession forces including lower fuel cost.
These all sound like a buy from my perspective. I can’t name one negative that is not balanced by one of the above possitives.
rd4sndk, on December 15th, 2008 at 8:34 am
Call me cynical, but Huberty’s downgrade came after Apple cleared $100 after she had set a one year price target of $105. I’ll still issue the woman a $10K bet that Apple finishes the year above $120.
Beltway Greg
Beltway Greg, on January 1st, 2009 at 3:10 pm