Apple Punk’d by Morgan Stanley…Again—- Jim Goldman

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    Posted: 10 December 2008 02:28 PM

    Jim Goldman shining the spotlight on Huberty. Andy Zaky gets a notable mention:

    So here we go again. Just when reality finally began to emerge from its shell on Wall Street, and Apple Inc. creeped above $100 a share, the company gets punk’d by Morgan Stanley.

    While so many other firm’s have been lowering price targets on Apple for weeks, Morgan Stanley analyst Katie Huberty holds the distinction of being the first to take an Apple target below $100. Her $95 target is the first double-digit one on the Street, and it comes at a time when Apple investors finally began to settle into a nice, stable, though small momentum to the upside.

    Timing is everything. What I can’t understand is why this analyst still carries the influence she does. I don’t know Katie Huberty but I do follow her work. Closely. So do many of you. Andy Zaky has written extensively about Huberty’s track record, missing revenue estimates by almost $1 billion and EPS by 6 cents. Those numbers could almost be forgiven because of the meaningless guidance Apple normally provides. Her estimates on individual business units, however, have been way, way off. She was 700,000 units below iPhone’s performance, 2 million units light on her iPod estimate and 200,000 units under Apple’s Mac number.

    This has been detailed extensively. We all know these numbers and her track record. And yet as soon as she publishes, as is the case today, Apple shares nosedive. Nevermind the news, the trends, the fundamentals, research elsewhere. A lower target is a lower target, apparently, no matter where it comes from.

    Huberty has turned lowering Apple targets into a bloodsport. She took her target down twice in a matter of days back in September. Today, her reasoning for a lower target comes because of worries about iPhone sales and a nervous consumer. Tell me something I don’t know.

    Zaky wrote me today, saying, “Apple, for the first time since pre- Lehman Bros. collapse, tested, and broke through the 50-day moving average. Apple also broke through resistance at $100 a share. If anyone wanted to keep Apple’s stock price down, today would be the day to downgrade Apple’s stock price. Not saying that Kathryn Huberty has any such motivation, but her timing is unusually coincidental.”

    Conspiracy theorists unite? Maybe, but it does seem weird, especially as Huberty’s note comes amid so many other analysts tracking iPhone sales momentum, including FBR out with a report this morning which concludes an iPhone slowdown, but not nearly as bad as some people thought. And there’s also that pending deal with Wal-Mart. 

    Don’t get me wrong: I’m not saying all is perfectly rosey. Geez, even Gene Munster lowered his Apple target. Sales are indeed slowing. But we know that. Have known that. Huberty might have reason to be at a Street low with her new target this morning. Yet her reasons are the same ones echoed by everyone else before her and her target is way below everyone else. Just like her iPhone, iPod and Mac unit sales figures. Which is something you might want to consider when trying to determine whether $95 is realistic. Or whether Huberty, like Apple sometimes does, is sandbagging Apple investors. Again.


    “the market can stay irrational longer than you can stay solvent”
    -John Maynard Keynes

  • Posted: 10 December 2008 03:04 PM #1

    “Mac brand satisfaction and market share momentum remain intact but PC purchasing plans over the next year are half of 2005 levels.”

    2005?!!!  Huh?

    “MSCO lowers Mac unit growth to flat and assign a 13x P/E to this segment (50% premium to P/Dell).” Flat?!!!  On the basis of what? Apple is only 50% better than DELL or HP?  You couldn’t pick parameters to make Apple look worse if you tried. Either Huberty is a complete idiot or is trying REAL hard.