“Sentiment among tech investors,” says analyst Daniel Ives, “is a negative as we have seen it in many years.”
From a note to clients that landed on my desktop Wednesday morning:
With shares of Apple down roughly 20% since the company reported earnings in early November, sentiment among tech investors is as negative as we have seen in many years covering the name.
It’s been a perfect storm for Apple (and its investors) as the combination of softer December guidance, pulling the iPhone metrics and lack of transparency from Cook & Co., a slew of negative data points out of the supply chain and from suppliers such as Lumentum/Qorvo, and now the latest China tariff news is just another potential headwind added to the mix.
To this point, the key question we keep getting from investors is, do you stay bullish on the name or just throw in the towel on the stock till the dust clears?
It’s a good and valid question as the negative data points around XS/XR iPhone demand especially out of China is a clear worry that will be a drag on earnings and growth in FY19.
That said, while this sell off has been a painful one that is hard to stomach for tech investors and caused many of our peers to move to the sidelines on the name, we strongly believe that the valuation on the name at current levels and further monetization of its 750+ million active iPhone installed base through future upgrades and a $50 billion+ services revenue stream speaks to our bullish thesis on Apple for the coming years which remains unchanged…
While we are lowering our price target… Apple still remains of our favorite tech names heading into 2019 despite the horror show over the last month seen out of Cupertino.
Maintains Overweight rating, lowers price target to $275 from a Street-high $310.
My take: Ives was the sell-side’s biggest Apple bull for six weeks. Sentiment changed. Now he’s No. 2.
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