$AAPL Rises on Dueling Analyst Notes

| Apple Stock Watch

Wednesday's Apple stock story is a tale of two analysts occupying different ends of the spectrum, with a variety of other analysts staking out ground in the middle. Brian White of Topeka Capital named $AAPL his top pick for 2013, while Pacific Crest analysts Andy Hargreaves downgraded the stock predicting iPhone doom and gloom.

In the meanwhile, $AAPL itself bounced off of Tuesday's losses to cross back above the $500 mark. As of this writing, shares of Apple were trading at US$508.20, a gain of $22.28 (+4.59%) on strong volume.

$AAPL Chart

$AAPL Chart for January 16th
Source: Yahoo! Finance

Brian White told his clients that, "The negative sentiment around the stock has reached epic levels that we haven't seen in recent memory and yet we believe the product portfolio has never been stronger."

He reminded them that Steve Jobs had insisted that Apple's brightest days were still to come, a message he still believes despite that negative sentiment. He believes that Apple will finally sign a deal with China Mobile in 2013, and that the company will reinvent the television experience during the next year or two.

He advised his clients not to make much ado out of reports of order cuts, a message that reinforces Sterne Agee analyst Shaw Wu's comments on the matter.

Mr. White is at the highest of the nose-bleed seats with a US$1,111 price target on $AAPL, more than twice what the stock is currently trading for.

Not so, said Andy Hargreaves of Pacific Crest. He told his clients that Apple's iPhone business is pretty much maxed out with little room for growth for the company. iPad? iPad mini is cheap and will hurt Apple's revenues. Apple TV? Pshaw. Ain't gonna go nowhere nohow. Cheaper iPhones to provide growth? Whatever. Incremental improvements to the iPhone itself? Yawn.

No, Mr. Hargreaves said that Apple's fair value is in the $440-$550 range, and he downgraded the stock to "Sector Perform," the equivalent of a "Hold."

Investors either didn't get the memo or were unconcerned, as the stock traded in positive territory throughout the day.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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Comments

Anon

If you check Andy Hargreaves’s research… You will see why it is a nonsense without any data to back it up. Another analyst that should reconsider changing jobs.

Paul Goodwin

What song will Bosco sing tonight?

RonMacGuy

What song? Not sure, but I can assure you, it’ll be the ‘wrong’ one!!

Constable Odo

I’d like to know why Apple is always maxed out and Google isn’t.  How much more growth can Google get out of the search engine it’s been running for years?  I think there’s really too much competition in China for Google to have significant growth in Asia.  That Hargreaves dude is really just speculating about Apple.  Anyway, Apple might not be worth anywhere’s near $1000, but $700 still seems reasonable and doable.

Winski

I knew a guy named Hargreaves when I was coming up in the tech biz…. He was an idiot too.

RonMacGuy

A part of me still feels that Apple may be holding onto all of its cash to someday take the company private.  No more dealing with Wall Street.  With the quarterly cash flow Apple sees (and will continue to see) they could easily do this within a few years.

OK, not sure it really makes sense to do this, but it is possible.

aardman

Apple going private?  Apple has 100-120 billion, right now it’s hovering at 500 billion market cap.  How much of a premium will they have to offer to get the nod from the institutional stockholders?  I won’t sell for less than $700 per share.  Let’s say whoever takes it private needs to come up with 700 billion cash, plus or minus.  Anyone foreseeing some private group and a coalition of lending banks coming up with that amount of money?

Bryan Chaffin

A private Apple would also lose the ability to use options as an employee incentive.

RonMacGuy

$470B market cap actually.  And I thought they were in the $120B cash/short term investments range a year ago.  I would have pegged them at $150B by now, but to be honest I haven’t looked lately.

Bringing in $10B-$15B a quarter, so $40B-$60B a year, OK, so they are more than a few years off I guess.  And yes, they would have to change their incentive approach.  But, given doom and gloomers, AAPL share price may continue tanking, so there is a possibility that market cap can continue to decline, yet they continue to grow revenue/cash, so it still is an interesting study that they could go private someday, almost entirely on their own.  Tons of saving from not having to deal with filings and regulations related to exchanges that they are listed on.  And, there is less pressure to focus short-term in order to ‘maximize shareholder value.’

Paul Goodwin

I believe their stock has gone about as low as it’s going to go. Even if their Jan 23 statement comes in below the dreamers’ expectations, if the stock dips, it will be a short one, and will come back strong, just as the majority of the major investment firms have been saying. Apple’s financials are strong. Investors with sound judgement will realize that the long term growth aspects are good, and Apple is still making more money than just about any company on Earth. I believe their stock today is still about $30 below where it should be. They are due some major innovation by late this year or early next year. I think it was Forbes who said that their stock is at a level of the fuddy duddies like MS and HP while the P/E is very strong. We’re not used to the present level of negative hype; we’re used to years of positive articles. Apple doesn’t need to change, they just need to keep developing and releasing the incredible products like they have been about every 3-4 years.  they have been doing for the past 14 years. No reason to believe they’ve lost anything. They know what a high demand product life cycle is, and that the competition will always come up to where they have been. When the next great thing comes out of Apple, we’ll see the same cycle of praise, then worry, then nay saying over about the same 3-5 year cycle. Keep the faith. They’ve got more money to develop with than just about anybody.

Paul Goodwin

In the middle, it was supposed to be…..at the level of fuddy duddies like MS and HP with Apple’s P/E being very low for such strong financials.

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