How's Everyone Feeling About Apple?
12/04/2013 11:00 am EST
Rather than suggesting a real change in attitude, MoneyShow's Jim Jubak, also of Jubak's Picks, feels something else is motivating analysts' recent upgrades and suggests you study this company's movement carefully.
'Tis the season to upgrade Apple (AAPL), fa la la la la, la la la la.
Yesterday, UBS upgraded Apple to buy from neutral, and raised its target price to $650 from $540.
Monday, December 2, Deutsche Bank raised its target for Apple to $625 from $575.
Ostensibly, the higher target prices are based on news/rumors that China Mobile (CHL) has finally struck a deal to sell iPhones, that gross margins on iPads are stabilizing at higher than expected levels, and that next year should bring new products that will erase worries that Apple can't innovate anymore.
I continue to like Apple for the long-term-it sells at a very low multiple on any reasonable projection for growth-but I have to wonder if these upgrades are based on new long-term information or are a reaction to Black Friday weekend numbers that suggest very strong Apple sales for the holiday retail season.
As an example, the news that China Mobile has struck a deal with Apple is based on a Web site claiming to be from a China Mobile subsidiary, offering to take reservations for iPhone sales (the site was taken down almost as fast as it went up). China Mobile is denying that there is a deal and the site could have been a hoax.
And, for an example, Digitimes reported yesterday that Apple's iPad mini tablets with Retina displays were among the most sought after tablets on Black Friday. Both Best Buy and Wal-Mart sold out of their stock of Retina display minis. That could simply be a reflection of supply chain problems at Apple that have kept inventory tight on the Retina display iPad minis, but Digitimes is also reporting that shipments of the Retina display iPad mini ramped up to four million units in November, and that tight supply seems to be easing.
I think Wall Street continues to be deeply ambivalent about Apple, and I see the recent upgrades as more an attempt to figure out where to put money now-with indexes so high and growth so hard to come by-than about any real change in analyst attitudes toward Apple's long-term growth story. (Apple is a member of my Jubak's Picks portfolio.)
My read then would suggest watching Apple's momentum carefully here, to see if this might be an occasion for one of those sell at the top and buy on the swing back to worry moments, which have made trading Apple so profitable this year for anyone who could catch the shifts.
Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Apple as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund's portfolio here.