Talking heads want Apple to drop to $125 (video)

From "How to trade Apple as Morgan Stanley predicts more iPhone issues ahead" which aired Wednesday on CNBC:

Morgan Stanley cuts estimates for iPhone shipments. With CNBC's Melissa Lee and the Fast Money traders, Tim Seymour, Karen Finerman, Steve Grasso and Guy Adami.

My take: With end-of-the-year vacations kicking in, I'm having a hard time getting my hands on this Morgan Stanley note, but I'm pretty sure it wasn't written by Katy Huberty. And given that other analysts had already forecast larger iPhone shipment cuts, I suspect it's not worth all the attention it got on Wednesday.

UPDATE: Got the note. It's a puzzler. See Morgan Stanley sees no iPhone demand destruction, cuts estimates anyway

15 Comments

  1. Warren Zimmerman said:
    Erik Woodring is the MS analyst now.
    He said this :
    We cut Dec Q iPhone units by another 3M (to 75.5M) to account for a slower Zhengzhou production ramp, bringing Dec Q rev down 3% to $120B. Remain constructive on iPhone demand durability given solid lead time data, but for now, conservatively assume no add’l units are pushed into the March Q.
    Reducing near-term iPhone forecasts following news of slower production ramp at Hon Hai; Overweight thesis and $175 PT remain unchanged.

    3
    December 8, 2022
    • Robert Paul Leitao said:
      That’s correct. The comments in the note are attributed to Morgan Stanley analyst Erik Woodring. Please see the Barron’s article linked in the Apple Share Price Performance channel of the Apple 3.0 Slack group. According to the article, Morgan Stanley is not changing its March quarter forecast at this time. While the analyst believes the supply shortage is more likely demand deferred to the March quarter, the analyst is quoted as saying, “more thoroughly de-risking estimates today is the prudent decision considering the uncertainty of the production situation in China.”

      4
      December 8, 2022
  2. Miguel Ancira said:
    If it does, it will be Black Friday for AAPL and Berkshire.

    2
    December 8, 2022
  3. Fred Stein said:
    Amazing.

    Folks who had been bullish on AAPL at $150 now say its expensive, going to $125 to $130.

    AAPL normally trades at around a 10% discount to average analysts’ PT’s which is currently $178. And, when the market does drop so far below PT’s, analysts tend to lower their PTs.

    Meanwhile Apple buybacks slightly more shares for the same buyback spend.

    2
    December 8, 2022
  4. Greg Lippert said:
    They gotta say something provocative – gotta keep viewers tuned in! Where else are they going to get sage wisdom!

    6
    December 8, 2022
  5. Fred Stein said:
    What’s with this technical stuff?

    The chart shows AAPL finding support at $130 in summer, then $135, and lately at $140. So far, lows are getting higher. And each dip is short.

    4
    December 8, 2022
  6. Lalit Jagtap said:
    The $141 (+ or – 2) is the best price point to enjoy healthy fruit for year 2022. Talking heads have not yet understood benefits of healthy eating for long term wealth.

    5
    December 8, 2022
  7. Bart Yee said:
    I posted this late yesterday and it bears a modified repost here regarding this Woodring / Morgan Stanley call:

    Importantly, Woodring suggests due to reduced iPhone supply overall revenue estimates cut to about $120B, compares now turn slightly negative -3.1% to YOY $123.9B. That would still be the second highest Apple quarterly record ever!

    To me, that would imply other Apple revenue segments to be flat to slightly higher. I would think iPads flat to higher on a previous year parts constrained compare, Macs flat to slightly higher despite no new products, iPhones down $3-6B-$9B, Wearables up 5-12%, and Services up 3% exceeding $20B for the first time. All of this despite about 700-800 basis points of improving Foreign exchange headwinds.

    If prior normal good times estimates were $126B, this is in line with a $6B-9B iPhone decrease buoyed by other segments increases.

    My hope is that all analysts revise their total revenue numbers down to account for an iPhone shortfall, making any expectations more realistic. Apple and AAPL doesn’t need unrealistic expectations to be compared with as if nothing untoward had happened.

    2
    December 8, 2022
  8. Neal Guttenberg said:
    With all the uncertainty going on, not just with Apple but with the market in general, it is prudent, if you are a person who is more of a trader than a long term investor, to look at the present situation and think that stocks, including Apple, may be a bit overpriced. As a long term investor and someone who believes in Apple’s long term prospects, it doesn’t affect me. Although I might be tempted with some small short term option trades, if I remember to go to the brokerage site and look things over to keep things interesting.

    But the other thing that we need to remember is that these guys make more money with more market churn so it is also in their best interest to keep things moving. Probably part of that going on as well.

    0
    December 8, 2022

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