Despite What You've Heard, Apple Has Momentum - JP Morgan Analyst

by: FP Trading Desk October 16, 2008 | about stocks: AAPL    

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Regardless of the current market turmoil, Apple Inc. (AAPL), in it’s current incarnation, is here for the long haul, says J.P. Morgan analyst Mark Moskowitz in upgrading the stock to “overweight” from “neutral.”

Mr. Moskowitz said in a research note to clients:

There has been considerable investor concern lately over the Apple model losing steam, particularly if the consumer . . . rolls over. We estimate that the company’s total model exposure is about 70-75% consume, but we think that Apple’s brand and market share momentum offer meaningful buffers to potential macro-driven pressures  on the consumer.

The analyst concludes that Apple’s current business model is “far more diverse” than previous vintages and that its “staying power” has been underappreciated. He adds that retail expansion could help the company sustain its market share gains and international momentum.

As well, the company’s iconic iPhone music player could be a stepping stone to further growth, and Mr. Moskowitz envisions the iPhone handset pushing Apple deeper into the set-top box market “as the convergence of voice, web, data and content continues.”

The analyst has revised his below-consensus earnings estimates for Apple, expecting fiscal 2009 revenue and earning per share  to come in at $36.98-billion and $5.27, respectively, compared with consensus estimates of $40.26-billion and $6.02.

With macro pressures showing no signs of dissipating,   Mr. Moskowitz says “it’s time to play defense.” He thinks Apple “can avoid having a major problem with the ‘e’ in price-to-earnings multiple through the coming year."

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This article has 4 comments:

  •  
    Oct 16 08:20 AM
    I'm long Apple... but I sold some shares at $108 because I think I can buy back more sub $100 in the coming weeks. I have a $250 price target a few years out. The convergence trend will overwhelm the weak consumer over time.

    20smoney.com
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  •  
    Oct 16 09:21 AM
    In bad times, people flee to quality and focus on what's important.

    And if Apple doesn't stand for quality, nothing does. As for what's important, after a roof and food on the table, access to the internet stands as one of the most important aspects of modern life. the tools to get to it are taking on more and more importance.

    Apple has momentum galore, recession or no recession.
    Reply | Link to Comment
  •  
    Oct 16 10:09 AM
    During the last recession Apple prepared for tomorrow. They had their inventory under control in 3 months and a new product line ready as the market recovered. Their competition has been one upgrade behind ever since. I wonder what they are quietly working on now. Stay tuned.
    Reply | Link to Comment
  •  
    Oct 16 10:42 AM
    in a real recession, it's the poorer people who do the worst because they already had almost no discretionary $. Apple is to computers what Bose is to sound. in the king of prussia mall, the two stores are next to each other and a starbucks but Apple still is the most profitable retail space. students get great discounts and they WANT a Mac...so better heeled parents all over the place will be buying them. i think lower end pcs will suffer...the wal-mart going public will be concentrating on food values, not computer prices.
    Reply | Link to Comment
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