Neil Hughes
There's a feeling on Wall Street that everything is already known and expected heading into Apple's "Hey Siri" event, investment firm Wells Fargo said on Friday, suggesting that any potential surprises could help push the company's stock higher.
Analyst Maynard Um said that even investors who are bullish on Apple have "low expectations" for the company's Sept. 9 event, where it is widely expected to introduce its new "iPhone 6s" series, as well as a next-generation Apple TV.
To him, any surprise from Apple could be to the upside, making it a good time for investors to buy in. Um has reiterated his "outperform" rating for shares of AAPL, as he sees a more attractive risk/reward for investors following a recent selloff.
"We note low expectations for the event, even from Apple bulls and think any potential surprise could be to the upside." - Maynard Um, Wells Fargo
Um had been bearish on Apple until late last month, when he declared that losses seen by the company's stock were an overreaction to the market. With continued strong sales in China, the analyst said Apple's losses created a buying opportunity for investors who might be on the fence.
For the so-called "iPhone 6s," Um expects what has generally been rumored for the device, including Force Touch input, 2 gigabytes of RAM, a faster "A9" processor, and improved cameras.
He's also pleased that the new iPhone is expected to once again come in capacities of 16, 64, and 128 gigabytes. He believes the entry-level 16-gigabyte model helps to push models to the pricier 64-gigabyte model for just $100 more, improving the device's average selling price and Apple's margins.
Um acknowledged that S-cycle iPhone upgrades typically do not show as much growth as well as Apple's full-fledged redesigns. But he also believes that those concerns about tough comparisons in the December quarter are already priced into the company's shares.
"We believe the stock has been reflecting this challenge and see the recent selloff as offering a more attractive risk/reward," Um wrote.
As for the new Apple TV and its rumored price of $149, the analyst believes Apple must demonstrate "significant innovation in its next-generation model to justify the price premium. The current, third-generation Apple TV debuted at $99, but is currently sold for $69.
Wells Fargo has maintained its "outperform" rating for AAPL stock with a "valuation range" of $125 to $135.
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16 Comments
"Significant innovation?" Eff you, analysts. What does that even mean? Is there an innovation scale? Should Apple "innovate" faster? Spoken like a true failed businessman.
Low expectations? WF clearly isn't reading DF or AI.
Is "financial analyst" still a real job? Do people actually get paid to make these third-grade predictions?
There are low expectations for Apple everywhere.
Most analysist think FY2016 will show small or no revenue growth. Most are targeting 5-7% revenue growth only.
I think they are greatly mistaken. The growth in China is just ramping up as LTE is quickly spreading across China. Apple will continue to steal share from Samsung as Galaxy S5 and S4 users will become eligible for upgrade.
Analysist are predicting 0-7% revenue growth.
I'm predicting 10-15% revenue growth for FY2016.
I love these low expectations from Wall Street instead of their unrealistic expectations earlier this year.
I was just glancing at an S&P stock report (one of the better, more sober ones in the business, generally speaking). They model 28% revenue growth in FY2015 for Apple, and 4.4% (no, that's not a typo!) in FY2016.
Yet, their "12-month price target"? $150.
Can you imagine how the stock will do if actuals for 2016 comfortably beat -- as they will -- such ludicrously low expectations?
[quote name="anantksundaram" url="/t/188025/wells-fargo-says-low-expectations-for-apples-sept-9-event-could-work-to-stocks-advantage#post_2770852"]I was just glancing at an S&P stock report (one of the better, more sober ones in the business, generally speaking). They model 28% revenue growth in FY2015 for Apple, and 4.4% (no, that's not a typo!) in FY2016. Yet, their "12-month price target"? $150. Can you imagine how the stock will do if actuals for 2016 comfortably beat -- as they will -- such ludicrously low expectations? [/quote]WS want to suppress AAPL at $115-$125 until Apple car is announced.