Analyst slaps $126 price target on Apple

invisibleSHIELD case for iPad“The few lucky investors that purchased Apple at $199 following the mysterious electronic plunge in the markets Thursday made a quick 20 percent return as the stock closed above $240. One of those buyers was definitely not Edward Zabitsky. He believes the stock is going to $126 and recommends selling it short,” John Melloy reports for CNBC.

“Zabitsky, who founded his research firm Active Communications Integration in 1997 to consult the telecom industry and institutional investors, believes one of the most-favored stocks on Wall Street will decline nearly 50 percent because of competition from phones using Google’s Android software and because of a double dip in the American economy that will hit luxury brands as a consumer and government debt bubble bursts,” Melloy reports. “‘Apple is a luxury brand and in the past has correlated very well with LVMH Moet Hennessy and Christian Dior,’ said Zabitsky, who is based in Toronto, in an interview today. ‘America didn’t get rid of the bad debt, the government just took it over and consumer credit is trending down.’”

Melloy reports, “To put his $126 target in perspective, the average forecast from Wall Street analysts is $300.”

For what it’s worth, Zabitsky declined to reveal his models that get him to the $126 figure, but said it was based on much lower iPhone prices hitting margins. The increasing capabilities of phones made by HTC and the end of the AT&T exclusivity contract will be the catalyst for that plummeting profitability. When the iPhone came out it was grossly different,’ added the analyst. ‘Apple has raised the bar on what’s normal, but other phones are easily narrowing the difference because web technology is easier to program.'”

Full article here.

MacDailyNews Take: Oh, happy day! Our search for the new Laura has finally ended! Eddie, you’ve been iCal’ed with a bullet!

In the full article, Pete Najarian, co-founder of OptionsMonster.com and TradeMonster.com, said it best, “If he is right and economic circumstances cause Apple to drop to $126, we’ve got much bigger problems to worry about than that.”

40 Comments

  1. Najarian is spot on.

    And there ARE other things to worry about CLEARLY.

    The Greek debt crisis is likely to spread and may drive the euro down further which only makes sales for Apple in Europe (there’s already a 25% price bump for the ipad in the UK) worse.

    The commercial real estate market is just about to get hit with all the credit default swap paper that’s been in the wings the last couple of years which is NOT good.

    But…these are ultimately just parts of the longer cycle…so hang in if you can.

  2. If Apple Drops to 126.00 the Market as a whole will be so far down that everything is going to be basically worthless, including Google, Microsoft, Adobe and all the rest. But, when a company is doing good everyone wants to use it to get their 15 mins of fame.

  3. 126 is too high. Think of all the mistakes Apple has been making lately. The iPhone is barely selling anywhere. And the iPad intro was met with a yawn. And they have noooo coherent content strategy to speak of — it’s just a patchwork of false starts (ie iTunes music and TV and movies). This guy should be hung for not going low enough.

  4. “‘Apple is a luxury brand and in the past has correlated very well with LVMH Moet Hennessy and Christian Dior,’ said Zabitsky.

    Odd to say. From autumn ’08 through early ’10, while so many luxury brands were down, Apple sales kept pushing substantially higher. The most common description of the company has been “recession-proof.”

    For an analyst looking for attention, this may seem like a clever call, but won’t look so good after while when MDN pulls up the iCal.

  5. Our society is fundamentally broken at it’s core. The reserve banking system has made it so more dollars are owed than exist in the world. they are running out of financial bubbles to inflate and pop… one day it will all fall down.

    it’s been a good run, but this century will see the end of this cycle of humanity. And that, IMO, is a good thing. whatever is next has to be better than what we’ve been doing as a species up to now.

    Until then, I’m gonna just enjoy my Apple products and not worry.

  6. “There is really nothing you must be. And there is nothing you must do. There is really nothing you must have*. And there is nothing you must know. There is really nothing you must become. However, it helps to understand that fire burns, and when it rains, the earth gets wet…”

    *We can all be Zen once we have our (cough, cough) Apple products.

  7. Apple haters are everywhere, I’ve gotten pretty expert at tuning them out completely. Too bad the stock will be hit but it has more to do with global economics than yet another Nokia lawsuit or some comment from Nintendo. They can’t beat the innovation and design expertise so they clog up the courts. Whatever.

    The best thing about being integrated into the Apple tech ecosystem is that stuff works. It’s not like these things will stop working when the stock fluctuates.

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