Apple is the new Microsoft, says Barclaysanalyst Ben Reitzes.
He downgraded the stock from “overweight” to “equalweight” (which is like going from buy to hold). He sticks with his $US570 price target.
He believes the stock will be stuck in a tight trading range for the next year or so.
“Frankly, we just couldn’t quite bring ourselves to use smart watches or TVs as reasons to raise numbers — nor were we fully convinced that these products could move the needle like new categories did in the old days,” says Reitzes. “As a result, we believe it is time to step aside, given a maturing smart phone market.”
He says he’s excited as a consumer for what Apple has in store, but as an investor, he doesn’t see it doing much.
“We believe Apple’s story is all about iPhones and ‘new categories’ seem to be designed to make the iPhone more useful — but don’t necessarily re-accelerate growth in the iPhone category to sustainable double-digit levels.”
He delivers a final dagger, saying, “We look at a valuation analogy vs. Microsoft from 2000 to about 2010 and see no precedent that large-size tech companies simply start to broadly outperform again after a tough year or two if the law of large numbers is catching up to them and margins have peaked.”
Oof! Microsoft has famously been flat for over a decade. Reitzes sees the same thing happening all over again, this time with Apple.