Seeking Alpha

Apple downgraded at Wells over margin concern

  • "Our bullish thesis on Apple had been predicated on the expectation for gross margin expansion driven by the 5s cycle," says analyst Maynard Um, cutting Apple (AAPL) to Hold with the price target remaining in the $536-$581 range. "While we still have conviction in the gross margin thesis (and the potential for iPad/iPhone unit upside), we believe this may be largely embedded into the valuation."
  • Along with margins, Um is also concerned about limited market opportunity in Apple's existing product lines, and a shift in the balance of power from handset vendors back to wireless providers.
  • Shooting back, Jay Yarow says he believes Apple has long-term contracts with carriers, and what's commonly known as a "subsidy" to entice buyers to purchase iPhones is really a loan that is paid back as part of the monthly service cost.
  • Um isn't all negative, seeing positive 2014 catalysts like the iPhone 6, the iBeacon, the iWatch, and the chance for boosted capital returns.
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Comments (28)
  • 2ng
    , contributor
    Comments (126) | Send Message
     
    Yes I also want to buy it cheaper before the EC...
    2 Jan 2014, 07:43 AM Reply Like
  • Advill
    , contributor
    Comments (2296) | Send Message
     
    Since when Jay Yarov has something interesting to say about Apple?
    2 Jan 2014, 07:54 AM Reply Like
  • aocdan2000
    , contributor
    Comments (14) | Send Message
     
    In other news: Wells Fargo stocks up on AAPL after downgrading them.
    2 Jan 2014, 08:12 AM Reply Like
  • fauxscot
    , contributor
    Comments (518) | Send Message
     
    Margin concerns? Yes, I have them, too. Samsung's margins. Apple's seem to be just fine.

     

    And recovering from pre-refresh levels.

     

    These dingbats will have to answer for this nonsense on 1/23.
    2 Jan 2014, 08:20 AM Reply Like
  • gensearch2
    , contributor
    Comments (1523) | Send Message
     
    Those dingbats don't answer to anyone for being right or wrong. There is no penalty for being wrong. Analyst are rewarded for who they know, whether anyone quotes them and how many times their face pops up on CNBC
    2 Jan 2014, 11:31 AM Reply Like
  • pman6
    , contributor
    Comments (270) | Send Message
     
    goddamn fearmonger
    2 Jan 2014, 08:45 AM Reply Like
  • wallberg
    , contributor
    Comments (54) | Send Message
     
    Who cares what Maynard Um thinks? We read the facts and Um goes on conjecture where he is formulating his opinion on incomplete data! Wells Fargo can barely take care of their own stock yet can go out and Bash Apple to start off the new year. Again it is a shame that Um is allowed to do this by SA!
    2 Jan 2014, 08:52 AM Reply Like
  • hawk007
    , contributor
    Comments (105) | Send Message
     
    I agree we should sell their stock too!
    7 Jan 2014, 11:34 PM Reply Like
  • Jack Baker
    , contributor
    Comments (990) | Send Message
     
    It's astonishing that these inept, feckless street analysts still can have this much impact on a stock price. Some of them are trying to manipulate stock prices for their proprietary trading desks and buy-side clients and others are just completely inept. In either case, they should be ignored by the market.
    2 Jan 2014, 09:06 AM Reply Like
  • UnStopaBull!
    , contributor
    Comments (179) | Send Message
     
    Cantor comes out with a $777 PT and named it the best large cap pick of the year. Nice to see consensus among the analysts.
    2 Jan 2014, 09:10 AM Reply Like
  • GRJ
    , contributor
    Comments (270) | Send Message
     
    Great start to the year. The whole Apple-plex (analysts, market makers, media) continues to reek w dishonesty.
    2 Jan 2014, 09:20 AM Reply Like
  • aardvark3
    , contributor
    Comments (563) | Send Message
     
    Very suspicious timing , this downgrade--- just before the big earnings and report on the China sales which should both knock the cover off the ball. I wonder how much AAPL Maynard will BUY today? I know I will be shopping. As the share price escalates in 2014, we will all be saying we shoulda, coulda, woulda. This is a little New Year gift from Maynard to himself. Let's get greedy too.
    2 Jan 2014, 09:25 AM Reply Like
  • JasonMiles
    , contributor
    Comments (184) | Send Message
     
    The usual story. One guy goes on a theory he concocted and he controls the stock price for a minute. That is incredibly scary to me and shows how shaky the market is. Apple has had so many positive things happen over the last few months. New amazing products,China Mobil,packed stores over the holidays. The stock should at this point be over $600 per share but in this world of stock manipulation Apple has been their target. I don't know what this company has to do besides bringing Steve Jobs back that will ever get a positive outlook from these over bloated ego maniacs
    2 Jan 2014, 09:43 AM Reply Like
  • CandleFlight
    , contributor
    Comments (444) | Send Message
     
    If Apple decided to stop innovating, this downgrade would eventually prove worthy. Personally, I think the picture, with such innovations as architecture of the new Mac Pro, likely appearance of at least two of the rumored products, and continued innovations in their existing mobile product lines (including their catbird's seat in 64 bit processing), place the proclaimed logical basis of this downgrade somewhere on the spectrum between supercilious and stupid.
    2 Jan 2014, 09:54 AM Reply Like
  • Andre Jenanji
    , contributor
    Comments (152) | Send Message
     
    I love it when they say it's embedded in the price because of the recent run up. Yet, it is still so damn cheap, that it is priced for failure.
    2 Jan 2014, 10:52 AM Reply Like
  • techy46
    , contributor
    Comments (8060) | Send Message
     
    His concerns are a little early, he should wait until Q3-Q4 2014?
    2 Jan 2014, 11:05 AM Reply Like
  • krichard
    , contributor
    Comments (188) | Send Message
     
    January 2nd and the manipulation begins already!! Just shameful but not surprising!!
    2 Jan 2014, 11:24 AM Reply Like
  • BLatham451
    , contributor
    Comments (5) | Send Message
     
    For Wells Fargo to come out and downgrade Apple on valuation when it's probably the best positioned tech stock on a value basis in the entire market, is a complete joke. Maybe that dumbass analyst should take a look at NFLX, GOOG, AMZN, YELP or a few others with a lot of higher p/es. This type of stock manipulation needs to be stopped. Apple goes up $6 and change on the last day of year, and apparently wells fargo boys weren't in the stock, so they downgrade it today on frivolous reasons so they can get in it.
    2 Jan 2014, 11:36 AM Reply Like
  • BLatham451
    , contributor
    Comments (5) | Send Message
     
    For Wells Fargo to come out on the first day of the new year, and downgrade Apple on valuation is a complete joke. Maybe that stupid analyst should have looked at AMZN, NFLX, YELP, or GOOG when looking at overvalued companies. Apple is the most well positioned, undervalued tech stock going into 2014 in the entire market. I guess Wells Fargo must not be in teh stock now, so they downgrade it, and get in on the selldown. This kindof thing happens all the time. It's not right, but it's what is happening. That analyst at wells fargo is a complete idiot- his reasoning behind the downgrade is frivolous at best.
    2 Jan 2014, 11:36 AM Reply Like
  • BLatham451
    , contributor
    Comments (5) | Send Message
     
    In only the first day of the new year, I think the dumbest call on the street for the entire 2014 year will be the one made this morning by the Wells Fargo analysts who downgraded Apple. Completely nuts to do so when the company had a banner Christmas selling season, China Mobile deal is done and earnings will go up on it, new products out in 2014, and an earnings call that should blow out everything in a month.
    2 Jan 2014, 11:37 AM Reply Like
  • aardvark3
    , contributor
    Comments (563) | Send Message
     
    He's just lookin' for a little press. Show him some love.
    2 Jan 2014, 03:51 PM Reply Like
  • WLS3
    , contributor
    Comment (1) | Send Message
     
    Just left Shanghai and the Apple stores are jammed
    2 Jan 2014, 11:37 AM Reply Like
  • exhon2009
    , contributor
    Comments (24) | Send Message
     
    When I woke up this AM and saw the price move I was concerned. I'm actually relieved that it was largely a response to a talking head downgrade. Having sold puts on Apple I will sleep better knowing Wells put a floor on the stock price close to the strike price.
    2 Jan 2014, 12:17 PM Reply Like
  • John N. Heil
    , contributor
    Comments (158) | Send Message
     
    It makes no sense for the Wells Fargo analyst to downgrade. I cannot even imagine whatever ulterior motives might be involved here. Other than the analyst wanting some personal publicity. I agree that it kind of puts a floor under the stock in the 550. area. But what is even more of a factor is that the shares remain cheap in terms of the company buying stock in the open market. That is the real gift here if Apple remains under 600. for a while. I say "bring it on" to all those wishing to sell their stock at 9X the ex cash number based on a conservative estimate for fiscal 2014 EPS.
    2 Jan 2014, 12:54 PM Reply Like
  • jjkiam
    , contributor
    Comments (390) | Send Message
     
    So mr Um bases his downgrade on the "possibility" that the Carriers will start to end their subsidies of smartphones. He doesn't even consider how the 2 year contract MAKES the carriers immense profits and of course doesn't consider Mr Yarrow's minor detail that Apple has LONG TERM contracts with its carriers! Even discounting this, he doesn't bother to ask which carrier will take the chance of removing the subsidy first? What will happen to their subscriber renewal base then ? How about he consider which smartphone company is better positioned to set up their own long term payment plan option than Apple in the event his fears materialize abruptly! This kind of shallow sophomoric hollow analysis should embarrass Wells.
    If I were a Wells client, I would seriously question how carefully their analysts perform their "research"
    2 Jan 2014, 01:39 PM Reply Like
  • Davy Crockett
    , contributor
    Comments (135) | Send Message
     
    Haven't we already heard similar opinions countless times already? One would think that by now, the shrinking margins possible scenario would be fully priced in. Rather pointless to be repeating it so close to earnings, unless the goal is to provide institutional investors with a better buy-in opportunity via talking the price down.
    2 Jan 2014, 01:56 PM Reply Like
  • jollyannie
    , contributor
    Comments (7) | Send Message
     
    good reason to short Wells………...
    2 Jan 2014, 09:32 PM Reply Like
  • User 835812
    , contributor
    Comments (1611) | Send Message
     
    When the correction comes, and it will come, watch the money run to AAPL with all of their 'margin concerns'. it comes down to cash, earnings, ability to innovate, etc...just buy on the dips if you can. it's still trading cheap. there is so much money in stocks that make no money the tide will rush out the minute the correction hits.
    5 Jan 2014, 09:48 PM Reply Like
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