This morning Credit Suisse issued a report that said that their "channel checks" showed that
Reports such as these were put out by Citi and Pacific Crest before Apple reported earnings as well.
I strongly recommend a look-see at the above links if you really want to get an idea of the fun and games Wall Street research is all about.
Keep in mind these "actionable" research notes were put out before Apple's September quarter results.
Interesting, huh?
In pre-market trade Apple shares are off almost 3%.
Strangely enough, Apple is so easily hammered lower even by the slightest piece of negative news.
Pathetic I know but that's how things have been with Apple coming up on a year now.
The analyst at Credit Suisse says, "In our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks/quarters."
Then he maintains his Outperform rating with a $140 price target.
Like I have explained in the past 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 maybe.
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.
Don't forget it's year end bonus time on Wall Street now and the heads of research and the heads of retail and institutional sales (heads of the broker force) are pushing their analysts hard to make these "actionable" calls.
Bonuses for the analyst, the director of research, the director of institutional sales, the director of retail sales will all depend on how much "commish" has been generated for the firm, so between now and the first half of December its put out what you can to get those brokers on the phone.
The analyst can't lose in this case.
On one hand he says shares will be dead for weeks and quarters and on the other hand he says Outperform (Buy for industry parlance) and a $140 price target.
So, it will shake the weak hands out who are already frazzled with this market and scared to death by the fear of the Fed, and provide an opportunity to those that choose to see it.
Simple as that.
Of course, the entire Apple food chain (
(long apple shares, long and short apple calls)
