Based on growing revenue and profits, it’s easy to see why many stock analysts and AAPL owners think Apple is doing just fine. The company’s biggest problem seems to be making products fast enough to satisfy demand.
Apparently math just isn’t what it used to be. Despite evidence to the contrary, including Apple’s ridiculous price-to-earnings ratio, Per Lindberg of ABGSC Sundal Collier has issued a sell rating on AAPL and a target of $400.
Using an emotional diatribe instead of numbers, Lindberg thinks AAPL has jumped the shark.
For all its commercial success, marketing prowess and brand image, Apple is bound to enter a phase of much stiffer competition, far tougher comparisons, and, materially less generous operator subsidies.
The PC, smart phone, and tablet markets are not competitive now? Samsung sells twice as many smart phones as Apple, but achieves one third the profit and half the revenue, so it must mean Apple is doomed.
I laughed at some of Lindberg’s so-called numbers. He predicted that Apple’s revenue would increase a mere $6-billion in 2014 from 2013, and gross margins would drop to 39-percent (from 42-percent).
Adding China Mobile alone to Apple’s quiver of cell phone carriers could double revenue and profits, but that opportunity seems lost in Lindberg’s analysis.
On the other side of the coin is Michael Walkley of Canaccord Genuity who says AAPL will hit $800 on strong sales of the iPhone 5.
Bolstered by the iPhone 5, we believe Apple’s industry-leading software ecosystem and integrated software experience will lead a strong multi-year cycle.
Why? Apple is growing sales rapidly in the huge China market, and the company’s iPhone 4 and iPhone 4S still sell in the millions. In other words, the numbers and new markets support continued revenue and profit growth, which, in turn, should support an increase in the stock price.
Which do you believe? $800? Or, $400?