What happens to Apple shares after the iPhone 8?

Apple bear sees a bumpy road ahead.

The conclusion of a note to clients by Barclays analyst Mark Moskowitz that landed in my inbox Thursday:

Since the iPhone 7 was launched in September 2016, shares of Apple have appreciated by 42%. While this is an admittedly large run, the stock actually appreciated by a greater percentage before both the iPhone 5 (+66%) and iPhone 6 launches (51%), respectively. This could indicate that there is still some upside remaining prior to the iPhone 8 launch on Sept. 12.

However, it is now becoming more important for investors to consider what happens after the next iPhone launch. If we use the iPhone 5 and iPhone 6 launches as reference, the 12 months following a major iPhone launch could actually be a much bumpier road for shares of Apple. In fact, following the iPhone 5 and iPhone 6 launches, shares of Apple declined by (33%) and grew by 14%, respectively. In our view, this could indicate that the risk-reward may not be skewed in favor of holding shares of Apple beyond next month’s launch event. When combined with our long-held view that the company may still be lacking a meaningful “what’s next” story we choose to remain on the sidelines with respect to putting new money to work in the stock.

Moskowitz maintains his Equal Weight rating and $146 price target (11% below Thursday’s $164 record close).

My take: Interesting. But as they say, past performance is no guarantee of future results.

5 Comments

  1. Jonny Tilney said:
    Those guys must spend sooo much time sitting on the lav…

    0
    August 31, 2017
  2. Fred Stein said:
    Here we go again. Tough compare, beware. But..to be fair…
    Based on the last 6 years, Apple’s forward P/E is very high. Likewise, based on the past, AAPL has had severe dips only to recover and rise to new heights.That’s just history. MM is advising speculators, not investors. Now where is MM’s DCF to fit his $146 target?

    I think we’ll see smaller, cheaper versions of the new high-end iPhones, driving sales for FY19 through FY20.

    1
    August 31, 2017
  3. Robert Paul Leitao said:
    Seriously? Is Mr. Moskowitz actually basing his Apple share price valuation model in part on percentage share price gains (or declines) following previous iPhone model releases? “What’s next” is unfolding before his eyes. Services & Other Products revenue growth combined with an ever-expanding base of iPhone owners matter much more in my view than Apple’s share price performance following the release of the original iPhone 5 handsets, for example, five years ago.

    I think he can do better.

    0
    September 1, 2017
  4. David Emery said:
    The problem with Apple’s approach is that there’s almost never a “what’s next?’ until it’s actually released. From an investor’s perspective, this lack of transparency on long range plans and strategy does introduce risk that there is ‘no next thing’ or that the ‘next thing in the works’ doesn’t make sense.

    On the other hand, this allows Apple to “get it right” and for the most part, Apple has done that. Apple Version 1 of iPod, iPad and iPhone all had significant limitations, but they were clearly revolutionary.

    So at the end of the day, you have to make a decision based on -prior performance-. 🙂

    0
    September 1, 2017

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