The AFB AAPL Price Target Index Advisory (Topic Closed)

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    Posted: 28 August 2011 12:12 AM #16

    Mav - 28 August 2011 01:03 AM

    Chas:  That’s really, really hard to do with accuracy.  I much prefer one EPS estimate at a time.

    AT:  Let’s not count the chickens (blowout iPhone sales, mostly) until they hatch (still waiting…)

    DT:  So is there a prohibition of detailed numbers being thrown around the forum (johnG’s excepted) until you post the indices at Posts At Eventide?  I can totally support that.  I’d actually prefer you just put that ground rule out here and now.

    Mervin and Marcel,
    How can a price estimate be any more accurate than an eps estimate? Last time I checked my price estimates, they were based on my eps estimates. As we’ve seen, price estimates are at the mercy of fickle P/E ratios and macro forces. I’m much more interested in showing that forward P/E numbers constantly reported are far more inaccurate than the already comical WS estimates. Of course AFBs will be off, but they’ll be far more accurate than anything else out Hell, I bet half of us that post quarterly numbers are already be doing these long term estimates. I’d just like to know that I’m not the only one out there with crazy big numbers!

    Thanks AT!

    BTW, agree with Mavs no-early numbers embargo. Make then do their own work.

         
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    Posted: 28 August 2011 12:14 AM #17

    mbeauch - 28 August 2011 03:10 AM
    Mercel - 28 August 2011 01:33 AM

    FQ3 2011 was a blockbuster.  FQ4 2011?  It’s not so easy to hit two grand slams in a row.


    Apple does not have to hit a grand slam in Q4, it might even be an afterthought. There will never be a quarter like this one where the attention will be on the next. Everyone and their mother knows Apple will come in with great numbers in Q4, the mother of all quarters will be Q1. The extra week should bring .60c to the guidance. Because of this I can see Apple giving guidance over $9 EPS. I would not look for to much of a sell off if Apple gives decent guidance like that.

    Agreed, guidance will be huge.

         
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    Posted: 28 August 2011 12:19 AM #18

    CharlieWindowsPC99 LOL,

    Your disdain for target prices is well known and is so noted.  wink

    Seriously Chas, I know what you’re getting at with the EPS deal (I mean, rough-sketch EPS estimates is half of how I arrive at my price targets), but 1-year EPS estimates also carries the same danger of notes-stealing, except WS can copy three more quarters out.  Would make an embargo much less meaningful.

    You’re not the only one with crazy-looking numbers out there.  My farther-out price targets don’t get to be that way without staggering growth projections in fiscal 2012.

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    Thanks, Steve.

         
  • Posted: 28 August 2011 12:23 AM #19

    ChasMac77 - 28 August 2011 03:12 AM
    Mav - 28 August 2011 01:03 AM

    Chas:  That’s really, really hard to do with accuracy.  I much prefer one EPS estimate at a time.

    AT:  Let’s not count the chickens (blowout iPhone sales, mostly) until they hatch (still waiting…)

    DT:  So is there a prohibition of detailed numbers being thrown around the forum (johnG’s excepted) until you post the indices at Posts At Eventide?  I can totally support that.  I’d actually prefer you just put that ground rule out here and now.

    Mervin and Marcel,
    How can a price estimate be any more accurate than an eps estimate? Last time I checked my price estimates, they were based on my eps estimates. As we’ve seen, price estimates are at the mercy of fickle P/E ratios and macro forces. I’m much more interested in showing that forward P/E numbers constantly reported are far more inaccurate than the already comical WS estimates. Of course AFBs will be off, but they’ll be far more accurate than anything else out Hell, I bet half of us that post quarterly numbers are already be doing these long term estimates. I’d just like to know that I’m not the only one out there with crazy big numbers!

    Thanks AT!

    BTW, agree with Mavs no-early numbers embargo. Make then do their own work.

    I never argued that price targets were more accurate.  Far from it.  You’re adding an extra variable that is WS. 

    Guidance for FQ1 2012 will be huge, but we won’t see $9 EPS.  Unless, of course, Apple launches an Apple HDTV.  :wink:

         
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    Posted: 28 August 2011 12:23 AM #20

    Will guidance be huge?  I’m not so sure.  The consensus for the holiday quarter stands at $8.66 presently.  Apple delivered $7.79 EPS on $5.03 guidance.  It could very well be that Oppenheimer guides to around $8 EPS while results may be way north of $10 EPS (not showing all my cards AT, so don’t freak out here).  Is this the kind of “below WS guidance but still surprises WS” kind of guidance that investors will cheer?

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 28 August 2011 12:30 AM #21

    Price targets have a great deal of value to me.  They represent my best attempt to define a plausible trading range for AAPL and help me formulate a trading strategy.  Of course it’s both depressing and a huge pain to revise my valuation bases for the price targets every single quarter, but I deal.  And after the pruning of price targets, I still can’t help smiling.  AAPL’s future doesn’t have to be all that close to my increasingly conservative P/E and even EPS estimates (which are more conservative for purposes of my price targets) for all of us to have a happy 2011 holiday season, and many, many happy returns in 2012.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 28 August 2011 12:36 AM #22

    Mav - 28 August 2011 03:23 AM

    Will guidance be huge?  I’m not so sure.  The consensus for the holiday quarter stands at $8.66 presently.  Apple delivered $7.79 EPS on $5.03 guidance.  It could very well be that Oppenheimer guides to around $8 EPS while results may be way north of $10 EPS (not showing all my cards AT, so don’t freak out here).  Is this the kind of “below WS guidance but still surprises WS” kind of guidance that investors will cheer?

    Guidance of $8 qualifies as huge in Apple terms.  LIke I said, we won’t see $9 unless Apple has some product surprises beyond iPhone 5.

         
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    Posted: 28 August 2011 12:43 AM #23

    I’m not convinced on the embargo, so convince me, please.

    I know there has been a competition with rankings showing how much better the independent analysts are than the pros, but that’s just a sideshow, right? We want Wall Street consensus to improve. They’re obviously not doing a great job of it so far, and I don’t expect them to become better out of embarrassment. What’s wrong with letting them see our estimates?

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    Posted: 28 August 2011 12:44 AM #24

    Totally agree about EPS guidance of anything over, say, $7.50 EPS from Oppenheimer as being historic and a wake-up call to analysts/WS.  But I subscribe to “Up is Down” (at times) theory to temper my expectations.  Seeing as AAPL traded with a P/E slightly below 14 at some point this quarter based on factors which had little chance of blunting Apple’s massive worldwide momentum, always assuming the worst (like a parade of “guidance misses” articles following fiscal Q4 results) isn’t a bad way to go.

    I think iPhone 5 is enough for a $9 EPS fiscal Q4, but it has to ship in force, early, and even then it’ll be pretty close.

    [ Edited: 28 August 2011 01:05 AM by Mav ]

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    Posted: 28 August 2011 12:49 AM #25

    Apple II+ - 28 August 2011 03:43 AM

    I’m not convinced on the embargo, so convince me, please.

    I know there has been a competition with rankings showing how much better the independent analysts are than the pros, but that’s just a sideshow, right? We want Wall Street consensus to improve. They’re obviously not doing a great job of it so far, and I don’t expect them to become better out of embarrassment. What’s wrong with letting them see our estimates?

    Honestly?  I think we’d prefer analysts get closer but not too close to what the independents are thinking.  Overestimating can be very dangerous for AAPL, even though such a thing hasn’t ever happened when AAPL was this, damn, cheap, so there’s no way of knowing the “true” damage in the event of a “disappointment”.

    The embargo doesn’t prevent WS from cribbing the notes.  IIRC DT usually publishes the indices around three weeks before the earnings release.  It just makes it that much more obvious when they do.  Also, it’s not like WS hasn’t had the benefit of countless PED earnings smackdowns showing how utterly wrong they are to adjust their methodologies (how about add 10% to revs, 15% to EPS to start?)

    Maybe for some of us, there’s a little historical caution built-in.  I’ll concede that higher WS estimates would probably allow AAPL to trade closer to a reasonable valuation.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
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    Posted: 28 August 2011 12:57 AM #26

    Mav - 28 August 2011 03:44 AM

    Totally agree about EPS guidance of anything over, say, $7.50 EPS from Oppenheimer as being historic and a wake-up call to analysts/WS.  But I subscribe to “Up is Down” (at times) theory to temper my expectations.  Seeing as AAPL traded with a P/E slightly below 14 at some point this quarter based on factors which had little chance of blunting Apple’s worldwide rise, always assuming the worst (like a parade of “guidance misses” articles following fiscal Q4 results) isn’t a bad way to go.

    I think iPhone 5 is enough for a $9 EPS fiscal Q4, but it has to ship in force, early, and even then it’ll be pretty close.

    There is exactly 4 weeks to go before the end of Q4. Do you think it’s credible that Apple could actually deliver ip5 3 weeks from today? Even in my wildest dreams that seems highly unlikely given the lack of concrete evidence of product buildout. Just not enough time!  It really does smell like an October ‘release’ to me. Regardless, I expect ~8.80 for Q4 earnings.

      cheers
        JohnG

         
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    Posted: 28 August 2011 01:00 AM #27

    Wimps, 2 words.

    China Mobile. Nuff said. tongue laugh

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    Posted: 28 August 2011 01:04 AM #28

    Sadly, the rumor mill brings its own blend of truth (until Apple can prove it’s shut down credible leaks, which is increasingly difficult to do).  I don’t have much hope of iPhone arriving in fiscal Q4, which makes it all the more puzzling that Oppenheimer would even invoke the spectre of iPhone 5 via “future product transition” language in the CC. 

    There’s no need for a “profit warning” or other explanation if the friggin’ iPhone 5 may not even launch until _late_ October, well into the holiday quarter.  It’d be best done explained after-the-fact - like Oppenheimer did when iPad 2 wasn’t telegraphed in a CC, and there was an sharp sequential drop in iPad sales for fiscal Q2 2011.

    mbeauch:  No guarantee of a TD-SCDMA iPhone 4/5 for China Mobile.  If it’s TD-LTE or nothing, you could be waiting as far out as early 2013.

    [ Edited: 28 August 2011 01:06 AM by Mav ]

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    AFB Night Owl Team™
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  • Posted: 28 August 2011 05:57 AM #29

    Mav - 28 August 2011 04:04 AM

    Sadly, the rumor mill brings its own blend of truth (until Apple can prove it’s shut down credible leaks, which is increasingly difficult to do).  I don’t have much hope of iPhone arriving in fiscal Q4, which makes it all the more puzzling that Oppenheimer would even invoke the spectre of iPhone 5 via “future product transition” language in the CC. 

    There’s no need for a “profit warning” or other explanation if the friggin’ iPhone 5 may not even launch until _late_ October, well into the holiday quarter.  It’d be best done explained after-the-fact - like Oppenheimer did when iPad 2 wasn’t telegraphed in a CC, and there was an sharp sequential drop in iPad sales for fiscal Q2 2011.

    mbeauch:  No guarantee of a TD-SCDMA iPhone 4/5 for China Mobile.  If it’s TD-LTE or nothing, you could be waiting as far out as early 2013.

    There’s absolutely no need for an earnings warning. If the iPhone 4 continues to the end of the quarter as the flagship product the margins will be unreal and unit sales will have continued to climb.

         
  • Posted: 28 August 2011 06:05 AM #30

    mbeauch - 28 August 2011 03:10 AM
    Mercel - 28 August 2011 01:33 AM

    FQ3 2011 was a blockbuster.  FQ4 2011?  It’s not so easy to hit two grand slams in a row.


    Apple does not have to hit a grand slam in Q4, it might even be an afterthought. There will never be a quarter like this one where the attention will be on the next. Everyone and their mother knows Apple will come in with great numbers in Q4, the mother of all quarters will be Q1. The extra week should bring .60c to the guidance. Because of this I can see Apple giving guidance over $9 EPS. I would not look for to much of a sell off if Apple gives decent guidance like that.

    FQ1 will be be not only an insane quarter for revenue and earnings, the foot traffic to the retail stores will be unreal. This is a monster quarter coming up.