How many times have you read at TMO that most Wall Street Analysts simply donit understand Apple? People like Rob Enderle, Andrew Neff, and Michael Hillmeyer consistently say what we editorially think are stupid things about Apple or AAPL. For many years, we have often published rants, deconstructions, and other opinions about some of the less than stellar things Wall Street has sometimes said about the Mac maker. Today, however, we bring you a note about someone at CNN/Money who effectively agrees with us, though he didnit name names. According to Paul R. La Monica, a senior writer for CNN/Money, Wall Street analysts simply donit get Apple. From the article:
Even though the companyis iTunes online music store is doing boffo business and its new Power Mac G5 has been met with mostly great reviews, the consensus rating among Wall Street analysts for Appleis stock is a 2.9, according to First Call. Ratings go from 1 (a Strong Buy) to 5 (a Strong Sell). So this is essentially a Hold recommendation which, as most investors know, is a nice way of saying Sell. Only two of the 14 analysts that track the stock rate it a Buy.
In some ways, a wary stance makes sense. Shares of Apple have surged 61 percent since iTunes debuted in late April. And the stock now trades at more than 60 times earnings estimates for fiscal 2004, an extremely rich valuation.
But then again, why should investors listen to Wall Street? Analysts were even more bearish back in late April, when the stock was trading at $13.35, despite its $4.5 billion in cash and negligible debt load.
"Apple has always been the oddball in the computer industry but without question they come out with the best products and they have so much cash. Iim a big fan," said Matthew Kelmon, president of Kelmoore Investment Co, which owns 100,000 shares of Apple.
Mr. La Monica closes with the following:
Of course, investors should be more wary of the stock now since it has enjoyed such a sizable spurt in a relatively short period of time. But donit look to Wall Street analysts for clues to Appleis future. They just donit get it.
As a case in point, we offer you the fact that Merrill Lynchis Michael Hillmeyer has had a Sell rating on AAPL for the last several months. During that time, the stock has almost doubled. Yesterday, AAPL closed at a 52 week high of US$22.19 on moderately strong volume.
There is a lot more information in the full CNN/Money article, and we recommend it as a very insightful and informative read.