This morning we have two notes out on Apple from two analysts that are pretty much diametrically opposed in what they seem to suggest to investors.
The first one is from Pacific Crest that says that its "supply and demand" checks (that's a new one from channel/supplier/channel check nonsense that went on last year-LOL) indicate that Apple's iPhone estimates are tracking at the low end of company guidance. As a result the analyst is lowering his estimates for iPhone shipments, revenues and earnings for the quarter and for the fiscal year as well. The firm also lowers their price target from $132 per share to $127 per share as a result of the trimmed estimates. However, the analyst says that he is maintaining his Outperform rating based on his optimism regarding the iPhone 7 this fall. That's a total CYA call in my opinion and is of very little help to any investor.
On the flip side, you have a note from Goldman Sachs that says that the March 21 Apple event at headquarters (no confirmation from the company as yet) will unveil the new 4 inch lower end iPhone meant for developing/emerging countries like India, a new 9.7 inch iPad Pro and a few new accessories. Although the analyst says that the 4 inch iPhone volumes will be smallish in the first year (12 million is her estimate), she believes that the 4 inch iPhone is not currently built in to current Street consensus, which will lead to Street estimates moving higher post the Apple event. She adds that recent production stabilization will also lead to higher Street estimates and as a result she iterates her "Conviction Buy" on Apple with a $155 price target per share.
So, what should an investor do here? We have two notes from two analysts making two completely opposing conclusions. The Pacific Crest note is, in my opinion a total "Heads I win, tails you lose" call that carries absolutely no value to an investor. The analyst is lowering his estimates, lowering his price target but keeping an Outperform which allow him to be correct no matter what. Total waste of paper.
On the other hand, the Goldman analyst, Simona Jankowski, is taking a stand and saying investors should be buying the shares now since she believes that estimates are going higher by the end of the month post the Apple event.
Whether you buy/add/sell/reduce/short is up to you but based on the two research notes, I would go with the latter.
(Long aapl, calls)
