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Photo: Associated Press
AAPL Flat As Market Trades Sideways
Stocks are fluctuating in early trading. Shares of AAPL are relatively flat out of the gate. Future catalysts for AAPL include monthly NPD data (Mac / iPod business); iPhone unit updates and AT&T exclusivity expiration; iPad sales updates; new content revenue streams such as video and books; and the refresh of Apple TV. AAPL trades at 15x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Analysts Continue To Flood The Market With Post-labour Day Research (Various)
And oh how I remember how much I loathed that feeling. Summer’s over. Back to the grind. Rats.
- Gene Munster at Piper Jaffray believes that Apple may lose as much as 20% of potential iPhone 4 sales (U.S.) because customers are concerned about the antenna design’s effect on signal strength. Munster surveyed 258 mobile-phone users and approximately two-thirds were aware of the antenna design, and 20% of those said it affected the decision to buy the phone. He believes the issue might cost Apple as much as $0.11 per share in the September quarter.
- Morgan Stanley equity derivatives strategists Christopher Metli and Sivan Mahadevan are recommending purchase of AAPL January $280 calls while selling the same number of January $320 calls (a call spread which cuts cost basis while capping potential gains). The rationale behind the trade is strong iPad sales growth and demand in China.
- UBS analyst Maynard Um raised his Apple earning estimates on strong iPad sales. He estimates Apple will sell 28 million of their iOS tablets in 2011. Accordingly, he upped Apple’s price target to $350 and reiterated his Buy rating.
Apple Eats Crow On Third Party Tool Development (The Wall Street Journal)
Apple backtracked from its controversial measure on its anti-Flash campaign: banning apps using third-party development tools. Yesterday, Steve Jobs reversed a five-month-old policy that had sparked an industry-wide debate, a government probe and many words of heated commentary. But what changed the company’s mind? Philip Elmer-DeWitt at Forbes believes it was three-fold: feedback, competition and regulation. Nick Saint at Business Insider believes that keeping developers pro-Apple is extremely important. The company needs to retain that.
Amazon Trying To Compete With The iPad (Barron’s)
Best Buy announced that it will start selling Amazon’s Kindle starting this fall (missing back-to-school season but in time for the holidays). This is a new strategy on Amazon’s part in attempts to increase the e-reader’s offline presence in view of the iPad’s phenomenal performance. Let’s hope the e-reader doesn’t get placed by the Best Buy Apple Shop.
What’s After The iPad; A Dividend? (Seeking Alpha)
Kevin Parker at Seeking Alpha believes Apple is a great stock, if you already own it. He thinks it is hard to justify an entry point at these levels. The iPad is a game-changer without a doubt. But what’s next? If new blockbuster products are not in the pipeline, with $30 billion in cash perhaps the board will turn to dividends as a way to promote shareholder value. I’m gonna have to say that’s a ways off. Especially since the iPad only debuted in April. And we haven’t seen what will happen with Apple TV or iAd.
Daily Trader: AAPL Leads Stocks Sold Into Strength Yesterday (The Wall Street Journal)
Apple topped the Selling on Strength list yesterday which tracks stocks that rose in price but had the largest outflow of money. Selling into strength is a proactive trading strategy carried out by selling out of a long or into a short position when the price of the asset being traded is still rising but is expected to reverse in price. This doesn’t bode well for today’s trading session.