Why this analyst who advises to ‘sell’ Apple is dead wrong

“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.

SEE ALSO:
Analyst downgrades Apple to sell because iPhone X is too popular – August 20, 2018

13 Comments

  1. Not to mention all the folks on the yearly upgrade program: Apple’s and all the carriers!

    How many new phones will that be? A good chunk of the phones that sold last year!

    I’d say this idiot missed his jumping in opportunity and is trying to make the market go back to where he feels comfortable buy a position.
    Hope the market doesn’t let him get in.

  2. Apple’s stock price regularly suffers when a consensus of analysts feel that Apple is going to disappoint in some way. Then a few weeks later, the real picture emerges, sanity returns and the stock price recovers.

    This has been happening for many years and is likely to continue. If you’re gullible enough to sell when analysts circulate vague stories about Apple somehow failing in the future, then you deserve to lose your shirt.

  3. “Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett

    “Your premium brand had better be delivering something special, or it’s not going to get the business.” — Warren Buffett

    “If past history was all that is needed to play the game of money, the richest people would be librarians.” — Warren Buffett

  4. All I see is an opportunity for Ive & Co. to get more creative and start designing some really sick iPhones that force us to upgrade even though we don’t really need another one. Can’t imagine what prototypes they’ve got in the lab right now.

  5. How very apt I saw the play Pressure yesterday where you had a weather forecasting for the Normandy landing purely based on on one guys faith in a few past years examples where things looked identical in terms of the underlying weather patterns. However he totally ignored the the new transforming effects of the Jetstream which was little known then and how it would transform those events and nullify this previous charts. Things never change it seems, clearly some analysts still don’t see the damn obvious more than creaping up from behind as they are too busy looking at the things they know because its in front of their eyes. how do these people get a job.

    Mind the idiot weather forecaster did go on to have a wonderful career in Hollywood weather forecasting and cloud seeding so there is hope for everyone I guess.

  6. Yet another fool who probably advised his clients to short AAPL a few weeks back. And now that the stock has surged they need to cover their shorts and are mad, so he is trying to bring the stock down to calm them down and avoid being fired

    Where is the SEC to investigate guys like this, blatant attempt at stock manipulation.

  7. Imagine too the pent-up sales for Mac Minis and Mac Pros, etc. once Apple gets off its keister and delights fans and users again! As far as the Mac Apple has not lived up to it’s potential with regular upgrades. May they find their way soon.

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