Morgan Stanley is out negative on Apple (NASDAQ:AAPL) saying they see near-term downside to AAPL shares in light of weaker demand, especially for the iPhone where expectations remain high. They highlight three surprising data points from their survey of 2,500 US consumers:
First and most important to the stock, despite significant price cuts, “extreme” interest in the iPhone is lower than February ‘07 survey (5% vs. 7%). They reduce CY09 unit forecast to 14mln (from 19mln) and note additional price cuts may be necessary to stimulate unit demand at lower margins. Firm assigns a 15x P/E multiple to iPhone, a blended average of RIMM and GOOG.
Second, Mac brand satisfaction and market share momentum remain intact but PC purchasing plans over the next year are half of 2005 levels. MSCO lowers Mac unit growth to flat and assign a 13x P/E to this segment (50% premium to P/Dell).
Third, iPod penetration peaked in the US and new purchases by the installed base this holiday season will fall well short of past years (6% vs. 40% typically). They lower CY09 unit growth (to -30%YoY) and assign a 3x P/E multiple which assumes revenues trend towards zero over the next three years
What’s next: MSCO lowersC4Q estimates but believes Apple can meet the wide guidance range provided in October given channel fill of new products. That said, consensus C1Q and CY09 estimates are at risk of lower unit demand, inventory adjustments and price cuts.
Notablecalls: AAPL stock is going to get whacked on this. I would not be surprised to see a 5pt downside move today. Note that MSCO's new price tgt for AAPL is $95.
First and most important to the stock, despite significant price cuts, “extreme” interest in the iPhone is lower than February ‘07 survey (5% vs. 7%). They reduce CY09 unit forecast to 14mln (from 19mln) and note additional price cuts may be necessary to stimulate unit demand at lower margins. Firm assigns a 15x P/E multiple to iPhone, a blended average of RIMM and GOOG.
Second, Mac brand satisfaction and market share momentum remain intact but PC purchasing plans over the next year are half of 2005 levels. MSCO lowers Mac unit growth to flat and assign a 13x P/E to this segment (50% premium to P/Dell).
Third, iPod penetration peaked in the US and new purchases by the installed base this holiday season will fall well short of past years (6% vs. 40% typically). They lower CY09 unit growth (to -30%YoY) and assign a 3x P/E multiple which assumes revenues trend towards zero over the next three years
What’s next: MSCO lowersC4Q estimates but believes Apple can meet the wide guidance range provided in October given channel fill of new products. That said, consensus C1Q and CY09 estimates are at risk of lower unit demand, inventory adjustments and price cuts.
Notablecalls: AAPL stock is going to get whacked on this. I would not be surprised to see a 5pt downside move today. Note that MSCO's new price tgt for AAPL is $95.
Too bad....she has been proven to be the worst AAPL analyst. It is well documented. Her estimate of iphone sale was 1.9 million unit while AAPL sold 8 million.
ReplyDeleteWell, Andy Zaky
Andy Zaky who has been done far better job than so called WS Analysts said a while ago:
http://seekingalpha.com/article/96803-worst-analyst-on-apple-lowers-price-target
Too bad...quants have already triggered a sell program, and traders will sell and ask question later.
Timing is another thing....AAPL was just hitting $100. So typical.
How in the world does Morgan Stanley's Kathryn Huberty keep her job? She has been wrong on Apple for nearly two years.
ReplyDeleteIf you want to know the insides of Apple take a peek at one of my fellow blogger's site:
http://financial-lchemist.blogspot.com/
Apple will probably finish in the black by COB... I didn't sell. This little bump in the road is BUYING TIME!
HH