Analyst recommends caution on Apple stock
updated 03:35 pm EDT, Mon September 21, 2009
Cites limits on growth
Bill Fearnley, an analyst with FTN Equity Capital, has dropped his rating for Apple stock, lowering it from Buy to Neutral. The analyst is generally positive about Apple's performance, noting that Mac sales are above forecasts, and that the fifth-generation iPod nano is a "big hit." iPhone sales are said to be meeting predictions, though there are stock shortages in some places.
The analyst's FY09 EPS estimate is being pushed from $5.94 to $5.97, while his FY10 figure is being raised from $7.08 to $7.22.
The problem, says Fearnley, is that Apple stock is presently very high -- valued at over $183 -- and it may have little room to grow further. On Monday shares had slid by $1.15 as of 3:30PM Eastern. Fearnley comments that Apple stock is already past FTN's most recent price target, which was set at $180.
Contradicting Fearnley's view is JP Morgan analyst Mark Moskowitz, who has assigned Apple an Overweight rating, and a price target of $210. Mac and iPhone sales are continuing to accelerate, Moskowitz says, providing good justification for raising EPS esimtates. FY09 EPS is now estimated at $5.92 rather than $5.84, and FY10's result is expected to be $6.96 instead of $6.58. In the short term, September quarter predictions are up from $1.37 to $1.45.
The quarter may also see a gross margin of 36 percent and an operating margin of 20 percent, climbs from respective 35.3 and 19.3 percent estimates. Moskowitz cites a more profitable mix in Mac and iPhone sales, along with help from Mac OS X Snow Leopard.
I agree
09/21, 05:03pm reply
that AAPL is priced too highly. I think it's $15 to $20 too high. This economy is not in that great of shape at all and it won't take much to puncture the mini-bubble of Wall Street bullishness we've been seeing.
I also agree that in the long run, AAPL is a great stock to own. Once people start spending money again (meaning, when job growth starts again in about a year or so), Apple is going to do very, very, very well.
climacs
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Joined: Sep 2001
Time for a
09/21, 05:42pm reply
2-for-1 split to increase perception of affordibility (and thus increase demand), as well as allow room for growth in stock price.
HCRefugee
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Joined: Mar 2003
Apple is about $20 undervalued
09/21, 11:41pm reply
Look for share price to be over $200 a share by the end of the year. This guy Fearnley couldn't find his own whang if it fell out of his pants. It may only have a little room to grow further? Is he nuts or what. iPhone sales in China could set off Apple share price like an afterburner. I hope his clients listen to him and sell their stock and when Apple goes up they can tar and feather him.
Constable Odo
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Joined: Aug 2007
Apple is priced to low for its performance!
09/22, 02:10am reply
Fearnley doesn't know what he's talking about. When a company does well the stock should rise no go neutral, what an idiot! Apple's stock should have been over $200 a share a long time ago. While everyone else is struggling, Apple is kicking a** and taking numbers. There product lines are strong, there innovations keep coming, there sales are to die for, and they have NO DEBT!!! Plus 28 to 34 Billion in the bank collecting interest. How much better does a company have to be for cried out loud!
Show me another company with this kind of performance Fearnley?
b9robot
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Joined: Feb 2009
priced too low
09/22, 01:32pm reply
Your argument seems to come down to "Look, Apple is making loads of money, and other companies aren't. So it should be worth more!" By that logic, why stop at 200? Why not 250? Or 500?
The point isn't how much they're making compared to anyone else, it's how much is the stock valued at compared to how much growth and value they have. A lot of people seem to think Apple sitting at $185 is based on where they are right this second, and since they have such potential, it should be so much higher. The fact is it is sitting at $185 because of its potential already.
testudo
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Joined: Aug 2001
Oh
09/22, 01:35pm reply
And, truth be told, let's look at the recent history. Why is the stock currently selling at $185? Is it because of recent announcements? Or perhaps a better financial forecast? Sales numbers coming in?
Nope. It jumped some $10 last week because some idiot on CNBC said it was a good buy. How exactly is that based on anything but just plain investor sheepdom?
testudo
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Joined: Aug 2001