You have to be brave or foolish to jump off the Apple bandwagon, as analyst Alex Gauna of JMP Securities knows all too well. Now Zacks has joined him.
As noted on Research Recap, Zacks this week downgraded Apple (AAPL) from Outperform to Neutral and slashed its price target from $422 to $351, citing “increasing competition in most of its major product segments, possible delays in product launch, higher operating expenses and increasing legal complexities.” But despite continuing concerns over component supplies, other analysts are retaining their bullish forecasts.
Zacks notes that “although earnings have been increasing at a much faster rate than expected, we remain concerned regarding the quality of Apple s earnings.”
Apple has been resorting to accounting jugglery such as capitalizing of operating expense, accounting changes for product warranty, reduction in valuation allowances, thus boosting net income.
Apple has been resorting to accounting jugglery such as capitalizing of operating expense, accounting changes for product warranty, reduction in valuation allowances, thus boosting net income.“Moreover,” Zacks adds, “the company is using deferred tax assets to lower its tax rate. We provide a word of caution to investors.”
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But Wedbush Securities analyst Scott Sutherland today reiterated his Outperform rating on shares of Apple, while raising his price target to $450 from $445, and raising his estimates for this year and next on the prospect Apple has “enough horsepower to drive continued revenue growth and upside to estimates.”
Piper Jaffray’s Gene Munster earlier this week reiterated an Overweight rating and a $554 price target, offering his examination of why the shares have “lagged,” as he puts it.
Barron’s writes that according to Munster the top reason is that investors are worried Apple’s “monster growth rates” will slow in coming years. Investors are expecting 15% to 20% growth annually, but Munster points out the company achieved an 83% revenue increase in the March quarter, year over year, after increasing revenue 49% in the year-earlier quarter. Munster sees room for expansion across the product line.
Barclays Capital also reiterated its Overweight rating with a price target of $465, noting that iPhone sales are likely to grow faster than the overall smartphone market.
Earlier this month Goldman Sachs analyst Bill Shope wrote that at current prices, “we would be aggressive buyers of Apple’s stock,” and reiterated his price target of $470 on Apple shares. He said concerns related to delays in the iPhone 5 launch, supply chain disruptions and CEO Steve Jobs’ health were overblown.
Credit Suisse analyst Kulbinder Garcha reiterated an Outperform rating and a $500 price target, addressing four pressing concerns he has heard from investors, and suggesting Apple could institute a 5% dividend and still have $100 billion in cash in five years from now.
Fortune has a long list of almost unanimously bullish analyst ratings on Apple following the company’s latest blowout quarterly results. Top among them is Brian White of Ticonderoga Securities with a target of $612, which he recently reiterated despite the reported supply problems.
Zacks is not out there alone, however. Alex Gauna of JMP Securities reiterated his Market Perform rating, saying “we continue to caution that slowing supply chain dynamics that accurately presaged lackluster iPod performance and an iPad shortfall could still play out further in a June quarter that will not benefit from a new iPhone refresh.” He has no price target.
Gauna had downgraded Apple in March and got ripped by Fortune’s Philip Elmer Dewitt for his trouble. A year from now, he and Zacks will be heroes or goats.
Apple opened today at $334.80, compared with a median price target of $465 in our latest full Prognosis.
Sources: Alacra Pulse, Research Recap, Zacks, Barrons Tech Trader Daily, Forbes, International Business Times, The Globe and Mail, Reuters.
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