“Of course, with Japan’s nuclear plants burning and the Dow dropping $242 and change, you would expect Apple (AAPL) to take a hit. So some of its $15.42 drop Wednesday (on top of Tuesday’s $8.13 loss) can be attributed to the rout that drove the whole market down,” Philip Elmer-DeWitt writes for Fortune. “But the Dow only fell 2.04% Wednesday. Apple’s shares had their third worst day ever in dollar terms, falling 4.46% before the market closed and losing another 0.94% in after-hours trading. By the time the high-frequency traders had done their worst, a company whose revenues grew 70.5% last quarter was trading — when you subtract out its massive cash holdings — with a forward P/E ratio in single digits.”
“So forgive me if I place some of the blame for what happened Wednesday on an analyst named Alex Gauna at JMP Securities,” P.E.D. writes. “I never thought much of Gauna’s work — his Q4 2010 predictions were among the worst of 38 Apple analysts Fortune surveyed — but he really distinguished himself Wednesday by downgrading Apple and casting aspersions on its product sales even as customers were still (five days after launch) lining up outside Apple Stores in the early morning hours to buy the latest iPad. Analysts with far better track records than Gauna felt obliged to shoot holes in his two chief arguments for downgrading the stock.”
P.E.D. writes, “But for me, nothing better underscored the shallowness of Gauna’s analysis than the appearance Wednesday of a 100-page report on Apple by a team at Credit Suisse headed by Kulbinder Garcha. Under the headline ‘The Most Valuable Company in the World?’ Credit Suisse set a $500 target — $170 above Wednesday’s closing price — and summarized its findings…”
Read Credit Suisse’s summary in the full article – recommended – here.
MacDailyNews Take: Never look a gift horse in the mouth.