UBS Wealth Management maintains cautious outlook on Apple shares
Operating independent of their investment banking counterparts, wealth management experts for UBS maintained a 'Hold' rating on shares of Apple Inc. this week, explaining that share pricing trends remain strong but present a less compelling opportunity from a risk reward standpoint.
Andersson expects that Apple's strong share price momentum will continue for the foreseeable future but advised clients that his "fair value" for the stock currently falls within the $111 to $145 range.
"We are increasing our iPhone sales figures to 15 million units in calendar 2008. These iPhone sales carry higher gross margins, leading us to also increase our 2008 [estimated per-share earnings] to $4.50 from $4.06," he explained. "However, rich valuations coupled with an uninspiring technical picture makes us cautious on the shares and hence we reiterate our Hold rating."
Given the "huge number of articles written and more than 100 million hits on the web," the UBS analyst said it's unlikely many people have missed the launch of Apple's new handset, the iPhone. The free marketing, he added, has massively helped kick-start the launch and he expects the Cupertino-based company to significantly beat its 10 million phone target by calendar 2008.
"We also think Apple could launch a smaller form-factor phone in early 2008 but note that the cannibalization rates of the iPods would mitigate some of that potential upside," he wrote. "All the nice-to-have features aside, its hefty price tag and mandatory data plan are likely to keep the iPhone from reaching mass markets."
In general, UBS Wealth Management Research is recommending 'a marketweight stance' on the overall U.S. Technology Hardware sector to its clients.
"New product life cycles and redeployment of excess cash could lead to positive EPS surprises for the sector in 2007," wrote Andersson. "We view two new operating system launches as incrementally positive for PC manufacturers."
19 Comments
"All the nice-to-have features aside, its hefty price tag and mandatory data plan are likely to keep the iPhone from reaching mass markets."
Correct me if I'm wrong (and this forum will) but didn't the "experts" say the iPod was too expensive too? Apple's ASP in digital audio players is well ahead of the competition BECAUSE people want the features.
Correct me if I'm wrong (and this forum will) but didn't the "experts" say the iPod was too expensive too? Apple's ASP in digital audio players is well ahead of the competition BECAUSE people want the features.
Really. The people that you deride were right to an extent. iPod did not get to its stellar popularity until well after the price went down and after the mini was released. Apple says the mini outsold the standard iPod.
Apple doesn't really sell on features, they often have fewer features, they sell on how well those features are done.
"However, rich valuations coupled with an uninspiring technical picture makes us cautious on the shares and hence we reiterate our Hold rating."
Uninspiring technical picture? What are they talking about?! An iPhone that is revolutionizing the mobile phone market and Leopard that will surely be a hit, don't seem uninspiring to me.
When will these so called experts learn. They still see things through dirty Windows.
"These young rock and rollers won't last" grandpa said about the Beatles.
The price of Apple shares is lower today than it will be this time next year. Another rally can come at any time, based upon the product and software announcements expected from Apple. In addition, if Apple's financial announcements on July 25 beat Street expectations, Apple stock could reach new highs.
UBS Wealth Management already hurt the pocketbooks of clients for which it did NOT buy Apple stock, because UBS's crystal ball is very cloudy. UBS will not be able to forecast exactly WHEN to buy Apple stock or when to buy MORE.
I own Apple and I am buying whenever I get additional funds. Apple is on a trajectory that is unique, and I expect it to do very well for the next 18 to 36 months.
Uninspiring technical picture? What are they talking about?!
I think he is referring to technical analysis of the stock price. It has gone up a lot,
so it might pull back for awhile, according to him. What gets me is that he predicts
that they will sell 15 million units in '08 and also says it won't reach a mass market.
How many will they have to sell to be a 'mass market'?