Here’s what these analysts were telling their clients before Apple’s share price took off.
From the Apple 3.0 archives:
February 2, 2018: Toni Sacconaghi, Bernstein: We are a little bit nervous about the fact that Apple built quite a bit of channel inventory this quarter on a sequential basis. It was the highest build ever. And when something analogous happened two years ago during the iPhone 6s cycle, the company end up drawing down inventory and disappointing over the next couple of quarters. And so we worry a little bit that the numbers are more likely to still come down further rather than go up. And so on net we just think the risk/reward on the shares is pretty neutral even though the absolute valuation looks very reasonable. Downgrade Apple to Market Perform and lower price target to $170 from $195.
April 29, 2018: Tim Long, BMO: We are lowering our Apple estimates ahead of the May 1 earnings call, as we believe Apple will guide down on weaker iPhone expectations. We believe price elasticity and lengthening smartphone replacement cycles are mostly to blame, and we do not expect the issue to be solved by the next cycle.
April 30, 2018: T. Michael Walkley, Canaccord Genuity: Ahead of Apple’s earnings report after the close on May 1, we are updating our iPhone estimates for both a greater anticipated inventory reduction during the June quarter and expectations for lower ASPs due to product mix. Our North American survey work and discussions with industry contacts indicate slow iPhone sales will likely persist until new products launch in September. Further, we anticipate Apple will clear channel inventory ahead of releasing three new iPhones in September 2018 to further segment its product offering based on price/features. Therefore, we are lowering our June iPhone estimate from 39.4M units to 34.5M units.
My take: Former Merrill Lynch analyst Henry Blodget was barred for life for hyping a company he didn’t believe in. What about downgrading a company that you do believe in? Is there no penalty on Wall Street for that?