When Analysts Upgrade Apple & Downgrade Google In The Same Day (AAPL, GOOG)

This was a strange day in the markets, not just because the non-farm payrolls and unemployment rate were far worse than expected.  It is just not that often that you see research firms upgrade Apple Inc. (NASDAQ: AAPL) and downgrade Google Inc. (NASDAQ: GOOG) in the same day.  That is exactly what we saw this Friday morning.  Apple’s target was raised to $500 at Canaccord Genuity while Google received a formal downgrade from Morgan Stanley.

Canaccord Genuity analyst T. Michael Walkley reiterated a Buy rating on AAPL, raising the price target to $500 from $485. The catalysts were solid demand trends for iPhone/iPad, poor sell-through trends for competing tablets, and the ramping iOS ecosystem all driving healthy long-term earnings growth.  Walkley also raised his calendar 2011 iPhone sales estimates from 75.5 million to 77.3 million units and 2012 calendar estimates from 94 million to 100.2 million units. He also increased calendar 2012 iPad estimates from 53.8 million to 55.1 million units.

As far as the Google downgrade from Morgan Stanley, that downgrade was to Equal-Weight from a previous Overweight rating.  Part of the fear is that margins will shrink as it ramps up new search products and as it keeps hiring.  With a new CEO and with a new integration happening, it is burdened with high return on investment projects.  High spending issues are a factor.  Morgan Stanley at one point even had this as a Best Ideas list at $730.00 for a target and it now is at $600.00.  The price target objective before today was $645.00.

For whatever it is worth, Canaccord Genuity’s Heath Terry recently maintained a Buy rating and kept its street high target of $800 on Google.  There is a $200 price target objective discrepancy now.

With just over two hours of trading, Google s down 2.6% at $532.25 and Apple is up 0.2% at $357.85.  With the NASDAQ down almost 24 points at 2,848.89, it looks like these research calls mattered.  Google reports earnings next week, and Apple is the following week.

JON C. OGG