Wells Fargo downgrades Apple on profit margin concerns

“After a subpar 2013, Apple (AAPL) kicked off the new year on a bearish note on Thursday after Wells Fargo downgraded the consumer electronics giant on concerns about future margin expansion,” Matt Egan reports for FOXBusiness.

“Shares of Apple retreated on the cautious analyst research, falling more than 1% in early action,” Egan reports. “Wells Fargo cut its rating on the iPad and Mac maker to ‘market perform’ from ‘outperform,’ although the bank maintained its conservative valuation range on the stock.”

“Wells Fargo analyst Maynard Um noted that Apple’s gross margins have dropped by an average of 2.25 percentage points following the launch of new form factor iPhones,” Egan reports. “Wells Fargo kept its $536 to $581 valuation range on Apple and noted holiday sales appeared to be ‘strong.'”

Read more in the full article here.

[Thanks to MacDailyNews Reader “silverhawk1” for the heads up.]

29 Comments

  1. Apple shouldn’t have so high margin. Apple should do like amazon , xiaomi . They have so little margin that the margin can’t be affected as the margin is so low that it won’t go any lower . Then there won’t be a margin concern .
    Is that the true meaning of investment ?
    Stocks that earn little can enjoy growth and no body will complain about and even say this growth is due to big market share.

    1. You nailed the hilarity point of the current tech stock fiasco. Amazon is the DAHLING of Wall-Nut Street, and they can’t make a profit. Apple is the biggest, most successful company on the planet, and FUD FUD FUD is the response. This is BOTH idiocy AND manipulation. What a mess, parasites to the left. Dolts to the right. Walk that line.

  2. Um…. What a genius… Telcos aren’t going to drop subsidies so fast no matter what they say ummmmm.. because iPads aren’t subsidized and most sim loaded iPad owners will take all their business to whoever has the brains to recognize their value…and continue subsidizing.

    Anyway, they are NOT really subsidizing anything because the two year contract they get in return for the discounted phone is more than made up for by the two years monthly fees, so let’s call a spade a spade um…

    Um… Where were you um when the meltdown was being made???
    Didn’t see that one either huh????

    1. Um is actually a pet name given to him by his teachers in school. Because every time it was his turn to answer a question or solve a problem, he would just have a stupid stare on his face and say um.

  3. Apple should have earned 1 billion . Then every year there is a growth of 40% . How many years does it take for Apple to earn 13 billion ?
    First year 1 billion
    Second year 1.4 billion
    Third year 1.96 billion
    Forth year 2.744 billion
    Fifth year 3.8 billion
    ……………

    See ! Apple can have growth of 40 % many many years IF ironically it had low margin at the beginning and earning much slower at the beginning
    Then the market will say Apple growth is amazing !!!!

  4. The only and the true problem with Apple is Apple earned money too fast .
    What Apple earned one year is equal to what others GROW for many years.
    Only way for Apple to get out of these bullshit is to innovate and by that Apple continue earning extra so the growth comes back .
    No other technology companies in human history ever can earn so much like Apple .
    Judging Apple using growth is stupidly unfair .

    1. Yup. There were a couple years of super innovative products (that took years to come to market) and accompanying massive profits. For some brainless reason that then became the ‘norm’ for Apple and everything less than stupendously incredible was a let down. It’s a spoiled child behavior. That’s one reason Wall-Nut Street deserves a sound THRASHING!, as my Brit father would say.

  5. 1. Who let Raymond out of his box?

    2. Maynard Um said three months ago that Apple would have higher margins…And now he is saying an unannounced product, with unannounced features, with unannounced pricing, will have profit margins.

    Hey Maynard I heard Samsung’s magic carpet is going to have low margins because the fabric is going to cost more than expected, we should sell !

  6. Apple falls on downgrades but it just as easily falls on upgrades. One weird freaking stock. However, it appears Apple fell about the same as any number of tech stocks so I don’t think the downgrade had anything to do with the drop.

    1. APPL did do incredibly well during the worst of the 2007 depression. I thought of it as the one single reliable stock with Apple not only un-killable, but outright thriving during the worst times. And it keeps on thriving now!

    2. Said it before, saying it again: Unless you’re playing with serious house money (i.e., big gains from the $12/share days), RUN, DO NOT WALK, from this equity. There is something seriously wrong with Wall Street and the coterie of analysts who affect its valuation.

      You said it, LB48: On downgrades, the stock falls. On upgrades the stock falls. Up 6 point today, down 8 tomorrow. Logic and facts have absolutely NOTHING to do with AAPL.

  7. It doesn’t matter how Apple performs, analysts will contine to game Apple stock.

    I wonder if Apple communicated more whether that would reduce the gaming. It seems like Apple’s closed mouth policy plays right into the hands of these jerks.

    1. No – absolutely not.

      If Apple were foolish enough to respond to rumours and speculative stories, it would only encourage more of them.

      Wall Street does not understand Apple and most likely never will. Apple would only lose if it dropped down to their level. Apple’s best strategy is to do what it has done for many years – concentrate on making making superb products and rise above the gossip.

      Apple always takes a long term view. If they say nothing and the rumours end up being incorrect, there will eventually come a time where even Wall Street might start to learn that most rumours are very wide of the mark.

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