“Help me make sense of this, because when it comes to Apple and Wall Street analysts, conventional wisdom seems to be in short supply, and losing interest in company fundamentals seems to take a back seat only to the loss of analytical fundamentals by some of the experts,” Jim Goldman writes for CNBC.
“Last week, it was Morgan Stanley’s Katie Huberty who took her target down to $95 a share just as Apple seemed to be gaining some sense of momentum by finally topping $100 a share. Never mind Huberty’s forecast-challenged expectations for Apple last quarter which came in woefully short of reality: Her call last week torpedoed that momentum,” Goldman writes.
“This morning, it was Goldman Sachs’ turn at the revolving analysis door when it comes to Apple. The firm added Apple to its so-called ‘Conviction List’ on May 23 when shares were north of $180 a share. The call back then was Apple’s amazing products, and surging iPhone sales. Adding the company to the list back then suggested Apple still had a ways to go as far as share price, prospects and momentum were concerned. Flash forward 7 months later, to this morning, with the economy in shambles, and Goldman downgrades Apple shares to “neutral,” and cuts its target to $115 from $125 because of consumer concerns and a so-called ‘valuation premium.’ Huh? Are you kidding me? This stock has been cut in half since May, since that ‘Conviction List’ news, and Goldman is downgrading and lowering now? Come on,” Goldman writes.
“The fact is, if there really were conviction when it comes to Apple, analysts would see a company still selling millions of products without having to lower prices and squeeze margins in the process, even in the face of an ever-weakening economy. They’d see a company still wildly popular with a staggering $25 billion in cash in the bank and no debt. They’d see a company still investing heavily in research and development and pushing the innovation curve. They’d see a company eating its competition alive in the market place, laughing at every so-called “iPhone killer” that comes to market. They’d see a company at the crux of a new online retail outlet that’s responsible for 2 million downloads a day, whether they’re free or come with a price tag. The company’s retail stores see millions of visitors every month,” Goldman writes.
Full article – highly recommended – here.
In a nutshell: Admist the current chaos, some analysts are no longer even bothering to gloss over their B.S. with their usual veneer of warped reality. Incompetence, or something else, reigns supreme today and those who are supposed to be policing the market and protecting individual investors are AWOL.
Goldman vs Goldman, a remake with Dustin Hoffman and Meryl Streep.
The big firms love pushing share prices down for one reason or another. But in this case, they are probably forcing the price of AAPL down so that they can get their best clients on board when a recovery happens and for those not cognizant enough to look at the details of these announcements, these firms then make a grip from clients who churn their accounts on every announcement.
‘In these troubles times’ no analyst will lose their job or get sued for preaching bad news.
This is STILL not an investors’ market. It is a traders’ market, pure and simple. And if you’re not the latter, you’re food, not friends. (With a hat tip to Bruce in “Finding Nemo.”)
What is their motivation? Are HP, Dell, RIMM, … their advertising source of income? Are their interest in the people and groups that are shorting Apple’s stock? Or, are they just clueless and incompetent?
That is like me seeing the Zune on Forbes “Top 10 Most Sought-After Gifts” today. Who would put a Zune on any list? What parent would give their child a Zune and send them to school or out with it?
Shrinks will ask troubled people, did you ever get a Zune as a gift? iPod and Apple envy!
Corruption.
How can you drop the target to 95 when it’s already over that? And now Sachs changes to neutral?? Are these people seeing the same sales data I am?
smart companies and people may feign ignorance, but be assured, this relates to pure self-interest. The cause of every problem these days.
Small shareholders no longer count in the big game. They never will unless tough regulations are adopted. Until then the market remains controlled by others with a completely different agenda.
The little guy gets the shaft…thanks, hedgefunds.
The analysts these days are applying the ‘Blago’ test, pure and simple – they hardly make an effort to hide it. “No benefit for me – no kind words for you”
Someone needs to remind these hooligans that Stock price manipulations are, in a single word, illegal.
Maybe Jobs should put the SEC back on the speed dial.
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I have lost all faith in equities and have abandoned those kinds of investments. Wall Street’s manipulation of the market is a crime.
And the coming devaluation of the US dollar and further market declines (Dow most likely to hit 5000) in the new year will only make matters worst.
Apple is great, we love them and their products, but they should do a buy-back and go private.
I’d see collusion, but for, once again, the ‘Careless Caveat:’
Never attribute to malice that which can be explained by mere incompetence.
Hang on there, MDN:
“those who are supposed to be policing the market and protecting individual investors are AWOL”
There’s nothing about an analysts’ job which involves policing the market or protecting individual investors. They are paid to look into their crystal ball and (supposedly) come up with insights on whether a company’s stock will be a good buy or not.
Policing and protecting is (supposedly) the job of the SEC, not analysts or investment firms. Investment firms’ jobs are to make money, and then hopefully make their clients some money.
Are these the same analysts that ignored the malfeasance and criminal activity on Wall Street as their like stole billions of dollars from the American public ? If they told me the sky was blue, I would run outside to verify the fact. One of these rocket scientists recommended Citi when it was at $50 a share, guaranteeing me a loss of $45 per share in just months. The money would have been better invested buying lottery tickets or engaging in some three card monte activity with one of the local street hoodlums. At least they don’t describe themselves as competent financial experts !
@bizlaw…
You completely misunderstood the MDN position, I think. They are explicitly calling out the SEC for not policing the analysts. Read it again, I think you’ll get it.
I get it….. I finally get it.
In the “good old days” ( you know, a couple of years ago. LOL) buying stock in a company was about finding a good solid company that was run well. It was going to grow bigger and stronger and if you wanted a piece of that action,….. you bought some stock in that company.
Today, things are different. We still call it stock, but its not. Not really. We are playing a numbers game and gambling. (some call it trading cause it sounds better. 🙁 )
“We” are betting that the price of the companies stock will go up or down so we can sell or buy and make money. These market traders have NO interest in how good a company is or how well its doing.. NONE. Zip NADA.
Its not about how good a company is doing but rather can you buy low and sell high….. or sell high then get the stock price low enough fast enough so you can buy low and make money.
Its all about faking the “market” so one can make money…. NOW, this second , this instant….. (remember the people that buy and sell, second by second, making hundreds or thousands of dollars, one minute at a time…. ?????
That is what is going on. PERIOD. Me, I am going to just forget about the price. For now. Let them drive it down in Feb as the market hits mega lows (news about forclosures due) and then I will buy a few more shares. Its a L o n g term investment, I shall strive to remember that.
Just a thought.
en
I’ve always been annoyed by the so-called experts, especially those that call on the phone wanting your business. Having had enough of the phone calls, I began to ask them one simple question and they usually left me alone after that. After giving me the line about how good they were and how much money they make for their clients, I’d ask, “If you’re as good as you claim to be, why are you working for someone else? Why aren’t you at home in a t-shirt and shorts trading like I am?” The other question I often asked was whether they traded options? As I did both back then (I trade 4x now), it was usually followed by a thank you, or an abrupt end to the call.
I trust no one with my money. Always remember. Tthe only person who cares about what happens to your money is you!
Apple is a great company, but the stock IS expensive on a P:E basis and a book value basis, at least when compared to other ridiculous bargain prices that can be found in the current marketplace.
Puts, calls, margin accounts, naked margins, stock prices delayed 20 minutes. Traders are allowed to drive the market up and down, making money all along the way. In the end the market is destroyed because the investors bail out.
The regulators who need to do their job would be the SEC, Congress and the President.
Everyone here should go read Benjamin Graham’s “Intelligent Investor” — if you haven’t, you’re probably a speculator and not an investor.
Some big important Goldman Sachs client want to go long on Apple before MacWorld and quarterly reports in January. The quarterly report will show Apple blowing away the competition in a supposedly “bad” quarter, and Apple will be seen as a good bet in a risky stock market, based on REAL fundamentals.
Once all the big clients are bought in, look for the same firms to pump up the stock ahead of MacWorld.
so like if I wanted to buy some AAPL
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Never done the stock market thing before. Do we have to use a British exchange? Do we get the same good prices?
This is manipulation plain and simple. It is also illegal. This stock come next quarter results will show huge gains. Market analysts are good now for doing the opposite.