Following Apple Inc.’s (AAPL
For the most part, it seemed as though the various analysts were underwhelmed with Apple’s new products, especially the pricing on the supposedly cheap iPhone 5C. As such, Apple shares are sliding in pre-market trading. Here is some of the commentary from analysts on Wednesday:
Negative CommentarySusquehanna
Chris Caso, an analyst at Susquehanna, reiterated his “Neutral” rating on AAPL, as he believes that this year’s iPhone product cycle won’t be a significant positive catalyst for the stock. Caso sees shares of AAPL reaching $440, which suggests an 11% downside to the stock’s Tuesday closing price.
“As usual, there were few surprises from AAPL’s well-previewed iPhone launch yesterday,” Caso commented. “We think the biggest surprise from an investment perspective is that the new iPhone 5C will be positioned as a midrange phone, and won't provide much near-term help in addressing lower price points in emerging markets, as some had speculated. We do expect the addition of DoCoMo and China Mobile to represent TAM expansion, but not to represent the significant volume boost that would come from a lower-priced emerging market phone. We therefore maintain our view that this year's iPhone product cycle isn’t a significant catalyst. We do, however, see a more significant catalyst next year, given our expectations for a larger-screen iPhone and as a new product cycle allows the iPhone 5C to be priced more aggressively at China Mobile.”
Credit Suisse
Analysts at Credit Suisse downgraded AAPL from “Outperform” to “Neutral” and see shares reaching $525. This price target suggests a 6% upside to the stock’s Tuesday closing price.
These analysts noted that Apple’s new iPhones lack innovation and that the iPhone 5S and iPhone 5C are both premium devices, despite the 5C being billed as a cheaper alternative. Because the iPhone 5C is not as cheap as the analysts would like, they believe it will limit Apple’s potential to see growth in emerging markets. Furthermore, the phones are “not quite on par” with other high-end smartphones.
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Bank of America Merrill Lynch
The analysts at Bank of America Merrill Lynch downgraded AAPL to “Neutral” from “Buy.”
UBS
The analysts at UBS downgraded AAPL from “Buy” to “Neutral.”
Nomura Securities
Though the analysts at Nomura Securities maintained a “Neutral” rating on AAPL, the analysts boosted its price target from $420 to $480. This new price target still suggests a 3% downside to the stock’s Tuesday closing price, however.
“Apple retained its pricing structure with its new iPhone portfolio,” Nomura analyst Stuart Jeffrey noted. “In not chasing a new lower price point and through taking out some key component costs with the 5c, we believe that Apple has likely ensured stable gross margins in the next couple of quarters. The lowest iPhone price point remains at $450, meaning that Apple has not expanded its addressable market by targeting more price sensitive market segments. A deal with Docomo was confirmed and an announcement regarding China Mobile seems imminent, boosting near-term estimates.”
Jeffery added, “2014 could yet turn out to be a great year for Apple, but there was nothing concrete to point to emerging from yesterday’s presentation. Until innovative new products are launched in 2014, we see limited upside in the share price. FY13E EPS from $38.73 to $38.9; FY14E EPS from $39.18 to $41.76.”
Jefferies
Jefferies analyst Peter Misek reiterated his “Hold” rating on AAPL and noted that he sees shares reaching $450. This price target suggests a 9% downside to the stock’s Tuesday closing price.
“The iPhone 5C’s $99 on-contract price is higher than expected and still leaves Apple with a product gap in the low-end,” Misek commented. “While the iPhone 5S fingerprint scanner provides some differentiation, we think its low yields could be a headwind to margins and initial unit volumes. We expect choppy trading for AAPL after the launch date.”
Positive CommentaryCantor Fitzgerald
Cantor Fitzgerald analyst Brian White reiterated his “Buy” rating and $777 price target on AAPL, as he called the iPhone event “historic.” This price target suggests a 57% upside to the stock’s Tuesday closing price.
“In our view, this was a historic event for Apple as the company began segmenting the iPhone portfolio for the first time ever with a lower priced iPhone, the iPhone 5C. We believe yesterday's gathering is but one in a string of events over the next year that will provide fuel for the stock in FY:14, as we enter what we believe will prove to be a year of innovation,” White noted.
FBR Capital
FBR Capital analysts reiterated their “Outperform” rati
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