Wedge Partners’s Brian Blair again sounds a cautious note this morning regarding Apple (AAPL) earnings, following a note two weeks ago urging investors to avoid the stock in advance of the fiscal Q2 report.
Again, Blair’s concern is the iPad, and rising estimates for how many Apple may have sold last quarter.
He notes that the stock’s price has made new highs since his cautious note, rising from $610 or so to hit $644 this week — helped, he writes, by price targets rising to $900 and even $1,001.
Altough Apple is “the best name in tech,” writes Blair, but it could be hurt if iPad and iPhone numbers don’t sufficiently beat.
Could the stock see such heights? Maybe (we prefer to think about it in $100 increments), but the near term questions for Apple are squarely related to two things: iPad and iPhone. Any kind of a shortfall relative to expectations in these categories presents near term risk, and in our view (given the move in the stock), these risks are magnified. Is Apple the best name in tech? Yes. Have we seen the stock price plummet in the past, when expectations were out of whack with results? Yes. In our view, there is some risk to this happening again in the March quarter, and the result would likely be the stock coming back down to earth�to some degree.
With the Street having raised iPad estimates for the March quarter to a range of 11 million to 14 million units, Blair believes a report of 15 million units would constitute a “blow out” quarter for Apple. An 11-million unit report, closer to his own estimate, would prove his thesis, he thinks, that demand has slowed.
And a report of 10 million of lower would be a “disappointment,” writes Blair.
Likewise, Apple has to meet a range for the iPhone of 31 million to 33 million. “Should estimates rise over 33 million, it could present added risk for the company in our opinion,” he writes.
Apple shares today are down $5.73, or 0.9%, at $617.19.
No comments:
Post a Comment