“Apple stock received a rare sell rating on Monday when New Street Research’s Pierre Ferragu downgraded the tech giant from hold to sell, citing tough iPhone comparisons in the coming years,” Daniel Sparks writes for The Motley Fool. “This year’s robust iPhone sales ‘will drive an ‘air pocket,’ and the introduction of a lower-price premium OLED phone won’t be enough to make up for the shortfall,’ said the analyst.”
“While it’s certainly possible that Apple’s iPhone business could face headwinds as the product segment matures and consumers upgrade their smartphones less frequently, Ferragu’s analysis fails to give enough weight to the growing importance of the rest of the company,” Sparks writes. “Ferragu’s sell rating came with a price target of $165, representing significant downside compared to where shares are trading today. To get to $165, Apple stock would have to fall 31%.”
“The analyst’s entire thesis is based on how the Street has reacted to worse-than-expected iPhone sales in the past. “History shows the stock suffers materially when iPhone revenues disappoint,” Ferragu said,” Sparks writes. “But Ferragu may be missing the point. Apple’s prior history doesn’t include a booming services segment — a business model investors are far more willing to assign a premium valuation — that was larger than every product segment except iPhone.”
Read more in the full article here.
MacDailyNews Take: Analysts who are still treating iPhone unit sales as end-all-be-all are woefully behind the times and do not fully understand Apple Inc.
Analyst downgrades Apple to sell because iPhone X is too popular – August 20, 2018