Morgan Stanley slashes Apple price target by 12%; shares fall in pre-market trading

“It’s only been seven weeks since Morgan Stanley analyst Katy Huberty elevated Apple onto Morgan Stanley’s ‘Best Idea’ list on the strength of what her proprietary surveys and Apple’s forward-looking statements were saying about iPhone sales,” Philip Elmer-DeWitt reports for Fortune.

“So the note she issued to clients Sunday night was a bit of a shock,” P.E.D. reports. “According to Huberty, rising international prices and smartphone market oversaturation outside China are weighing on Apple’s primary source of revenue (52% of fiscal 2015 sales). The same surveys that showed iPhone sales rising 6.8% in fiscal 2016 now show them falling 5.7%.”

“Apple is still a Morgan Stanley ‘Best Idea.’ Hubert sees Apple’s market share increasing to record levels in 2016, up 8% in the U.S. and 2% in China,” P.E.D. reports. “Anticipating a strong reaction, Morgan Stanley has lowered its Apple price target 12%, to $143 from $162.”

Read more in the full article here.

MacDailyNews Take: Year-end actionable “research” designed to generate buys and sells from clients – and, most importantly, commissions for the brokerage firms.

As Jay Somaney explained regarding an AAPL note by Credit Suisse for Forbes on November 10th:

This is a commission generating note issued by the analyst so as to provide the brokers at Credit Suisse a reason to call their clients to sell/add/buy shares of Apple as the case may be.

The calls from the brokers to their clients would be something along the following lines:

• To a client that is already long the broker would say, “our analyst just found out some information not yet out on the Street and he says shares will remain weak for weeks and quarters and you should sell yours hares in Apple and buy XYZ instead.”
• To a client that has no position in Apple, the broker would say, “our analyst just made a great call on Apple and the shares are down around $3 per share and I know you have wanted to buy Apple and here is your opportunity. He still has an Outperform on the stock with a $140 price target.”

So, what the analyst did here is come out with a negative note that will get the shares moving, in this case lower (matters not actually) and allow the brokers to call their clients and ask them to buy/add/sell as the case may be.

It’s called an “actionable” research report in the business.

Wall Street is a game – and a slimy, rigged one at that. Understand the “rules” in order to play it well.

SEE ALSO:
Apple stock slides on Credit Suisse claims of iPhone component order cuts, weak iPhone 6s demand – December 2, 2015
UBS analyst’s latest ‘research’ note on Apple is just another ‘actionable’ note and should be totally ignored – November 16, 2015
Apple shares continue to get slammed on commission/bonus related ‘actionable research’ – November 10, 2015
Apple lower after Credit Suisse notes substantial supply-chain cuts – November 10, 2015

29 Comments

  1. It just won’t ever end. MDN and its sycophants are forever in denial. AAPL is not hopelessly mired at a price substantially lower than what it should be because of market manipulation or some other phantom excuse. There is one and only reason for our misery. His name is Tim Cook and until we have a CEO who is not Tim Cook, nothing is going to change.

    For so long it has been his weak leadership that Wall Street has been worried about, now it is that AND the result of his weak leadership with hard and soft products that no longer “just work” but tragically the now certain process of rolling out stuff before it is ready, ignoring a major customer base for the sake of making phones, and abandoning the culture of developing superior products and service that used to be the hallmark of the once great company.

    Wall Street doesn’t respect companies that focus on social and political agendas. They respect companies that produce superior products and services. Apple doesn’t do that any more. So just forget about the misery of AAPL and enjoy what is left of what used to excite us and be satisfied that our stuff is not better than that being produced by dozen of others.

    Morgan Stanley’s new target likely will not be achieved in the new year or beyond. Tim should take his zillions of dollars and go set up a non-profit that specializes in all his causes and let Apple Inc. see if it can emerge from the mess he has made of it.

    1. MDN and others were saying Apple was exactly as under priced when Jobs was alive and still in charge. Sure there may be some genuine questions about Apple in terms of things we think have perhaps slipped, but even then for the price to drop so much despite estimates still being for a much higher price don’t make a great deal of sense.

      Once they’ve panicked a load of customers to sell they’ll pump it up again.

    2. Oh the smell of rotten troll in the morning, mmmmm mouth watering. Jay’s comment about Tim Cook is as relevant as the comment about itself.

      The one hitless wonder has spoken before: “You will be pleased to know that I’m about done with saying what I say on this board – it’s clearly been therapy for me and I’m very close to not needing it any more – I’ve reached the realm of apathy.”

      Unfortunately it just won’t leave, it just returns repeating the mantra he has for years hoping that it will come true. Well it hasn’t for the poor troll, and it won’t for the foreseeable future.

      By all means the troll will continue to visit it’s in their DNA to lie.

      1. The default response to my posts is to say I’m a troll. I am not a troll so say something intelligent instead of cheap name calling. I’ve limited my involvement on MDN because nothing changes. When it does, I’ll be here to celebrate. In the meantime, it is what it is and I’ve gotten it right over and over again.

        1. No Jay, the default response to your posts by me was to engage in a civil discussion and exchange with you supporting your ideas as potentially valid. I made many an intelligent post with you and sometimes received them but face it, you only deliver the really so not intelligent replies such as “it’s clunky” when the watch came out and your redundant singular focused “Not Tim Cook” “Not Tim Cook” mantra. You are so moronic you can’t even come up with an alternative name for someone to run Apple, no, it’s all “Not Tim Cook” for you troll. You keep going down that obsessive path.

          It’s your free will, so go ahead put yourself in perpetual purgatory waiting for that precious celebration, just like Gollum waited for his precious. Yes that precious celebration when we will all bow to the wonder that is Jay Morrison. Talk about delusional troll.

          You haven’t gotten it right past your mind in a long time troll Jay. You’ve earned the moniker myself by your behavior, so please, continue your feeble attempts to put default responses in my mouth. It’s what earns you this troll status.

          Now go write something else about Apple. Oh wait, you are a troll.
          YOU CAN’T.

          I’ll celebrate that right now.
          HEY MDN community. Jay Morrison can’t make a post on anything else except for Tim Cook.
          Let’s celebrate that…YAHOO…

          Oh lookie this “Yahoo Tech names Apple iPhone 6s ‘Smartphone of the Year’”

          Takes great leadership to make the smartphone of the year.

          More things to celebrate.

    3. Most homophobes are just trying to hide their personal attraction to persons of their own sex. You’ve got it REALLY BAD! Hating yourself and others like you won’t change who you are.

      Incompetence, arrogance, ignorance, and narrow-mindedness–project much do you?

  2. “The same surveys that showed iPhone sales rising 6.8% in fiscal 2016 now show them falling 5.7%.”

    Yes. I need some more churn in my clients’ stock so I can afford that new $100,000 car for my spouse for Christmas! Sell! Sell! (Last week it was “Buy, Buy!” Both ways we make our commissions!)

    Why is this kind of crap not illegal?

      1. AAPL is blessed with the movement on rumour, news or opinion. Any one or combination of these will depress the stock. The market is afraid of a consistent winner so they sell when they think it ‘might go down’ and they buy it when is is down. The strategy works for traders and they make consistent big money because AAPL is so very liquid (as a stock).

  3. The share price is completely irrelevant to companies like this, they make money on the fluctuations, on people buying and selling, hence why they’re now pessimistic based on nothing.

  4. U must be reading headlines only my friend. Also, u must be new Apple town.

    I would suggest u to not post any comments here anymore and get back to your zune media player.

  5. Well, I for one am much more worried now. Katy Huberty has consistently been a bull and even gets the privilege of being the first few analysts to get to ask a question at the end of the quarterly conference calls.
    I understand that we should rely only on apple’s forward guidance but not all things can be anticipated. Like the strength of the dollar and the way apple has increased its prices overseas. I have noticed first hand in India that sales have been disappointing this year compared to last because of the huge markup which in turn was because of dollars strength (BIG thanks to janet yellen)

    Whats most frustrating is that the market completely ignored Huberty’s adding AAPL to best buys list a few weeks ago. Market ignored late last week 3 analysts upgrading APPL. But now that someone is out with bad news, AAPL is getting figured. Go figure 🙁

    1. Sorry. If you go back in time, Katy Huberty’s analysts calls were usually low — very low.

      KH lowered her price target from 162 to 143 …and so Apple’s share price drops below 111 ? Now that is rational, isn’t it?

      Dear SEC: Please outlaw micro trading! It does not enhance market liquidity. It only adds to variability. While enriching only fat-cat middlemen skimmers with fast computers near the stock exchanges.

  6. Bullshit in other words. That saturation crap excuse is so old already. There are over 1 billion non-smart phone users still out there as pointed out by Tim Cook. The market is far from saturation and those who have smart phones will always want to upgrade to the next thing.

  7. If people actually had any faith in Apple, they wouldn’t be dumping their shares on speculation. Apple’s weak leadership must be the cause of people tossing their shares away. No one listens to Tim Cook’s guidance or they wouldn’t be so quick to bail on the company. One thing for certain, no one listens to Apple’s upbeat forecasts from analysts but they sure do listen to the negative ones.

    I was hoping Apple would finish the year above $120 but that figure seems almost impossible to reach. Very disappointing year for Apple shareholders for a company the CEO says is breaking records in sales. To me, the company does seem to be doing well, but the stock is doing rather poorly. If only the future growth potential matters for high stock value then Apple’s stock value has certainly reached its upper limits.

    1. Steve Jobs never had much good to say about Wall Street, either. Take a cue from him and don’t let it get you down. If something (eg, pessimism & negativity) cannot go on forever, it must eventually stop.

  8. It is great game. Pump up aapl to120 and then bring it down again. Someone is making money and some poor sods are losing it.
    This could also be due to the high option interest that is currently ongoing.

  9. I have been an Apple “fan” in the past. Being on-board with Apple felt like being part of a Movement. But not any more. At least not to me. So I’m actually less thrilled by Apple these days.

    They’re making a lot of money, and certainly have phones locked up for the foreseeable future, but Watch is a bit flat, iPads have a loooong life cycle (longer than PC’s I’ll wager), and Car is a huge bet that, like watch, iPhone, and iPad before it, will probably be a marginal offering for years after coming online.

    Apple is already the largest company in the world, so I’d suggest all their success is already baked in. And if future dominance looks like a challenge (consider how they’re being blocked at every turn on Apple TV), then yeah, the stock will probably drift.

    Me, normal guy in the midwest, I see no reason Apple should suddenly rocket up 30% any time soon.

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