Apple shares drop 3% on analyst downgrade; iWatch and mobile payments cited
Apple stockholders have enjoyed a recent run up in the shares to a new all-time high (taking into account the 7 for 1 stock split that took place earlier this year). But those riding the stock higher, have run into a little hiccup after an analyst downgraded the stock on Wednesday. Pacific Crest analyst Andy Hargreaves is recommending that Apple stockholders sell their shares.
What has turned Hargreaves bearish on the tech titan is the speculation that Apple will enter the mobile payments arena with the Apple iPhone 6, and the strong possibility that Apple will soon unveil a wearable product. The analyst believes that mobile payments and the long-rumored Apple iWatch will not add enough pop to the bottom line. For a company the size of Apple, the profits generated by entering the mobile payments business, and from selling a wearable device, are "not meaningful" in the "near to medium term."
Not all of Wall Street is down on Apple. On Tuesday, Piper Jaffray's Gene Munster raised his target on the stock to $120. Apple is currently trading at $99.10, down over 3% on the day.
source: BusinessInsider
Pacific Crest still has Apple rated "Outperform," with Hargreaves expecting the Apple iPhone 6 to prop up the stock. In fact, despite telling clients to take profits in the stock, he also suggests that investors hold on to some Apple shares, at least through the September 9th event at which the iPhone 6 and the wearable device are both expected to be unveiled.
"We recommend investors begin to take profits in AAPL. The stock is currently trading above our $100 price target and we believe prices in the vast majority of potential upside from the iPhone 6 product cycle. We are maintaining our Outperform rating until we see detail on new products and services at Apple's Sept. 9 event. However, if the announced products and services do not suggest massive incremental profit opportunities, we are likely to downgrade our rating for AAPL."-Andy Hargreaves, analyst, Pacific Crest
"We expect a new payment partnership and entrance into the wearables category to be Apple's most significant new product launches in the next six months. Based on the work we have done, we do not expect either new segment to drive incremental profits that are meaningful at Apple's scale in the near to medium term. However, we are open to being wrong on this and believe investor confidence in the iPhone 6 cycle will support the stock through the coming event. Consequently, we recommend holding some position in AAPL through the Sept. 9 event in the hope of getting clarifying detail on the profit potential of new products and services."-Andy Hargreaves, analyst, Pacific Crest
"We expect a new payment partnership and entrance into the wearables category to be Apple's most significant new product launches in the next six months. Based on the work we have done, we do not expect either new segment to drive incremental profits that are meaningful at Apple's scale in the near to medium term. However, we are open to being wrong on this and believe investor confidence in the iPhone 6 cycle will support the stock through the coming event. Consequently, we recommend holding some position in AAPL through the Sept. 9 event in the hope of getting clarifying detail on the profit potential of new products and services."-Andy Hargreaves, analyst, Pacific Crest
Not all of Wall Street is down on Apple. On Tuesday, Piper Jaffray's Gene Munster raised his target on the stock to $120. Apple is currently trading at $99.10, down over 3% on the day.
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