Analyst reinstates Apple — for now
Oppenheimer & Co.’s Yair Reiner turned heads on Wall Street three weeks ago — in the wake of Apple’s surprise announcement that Steve Jobs would be skipping Macworld 2009 — when the analyst downgraded the company and refused to set a price target for its shares until he got some answers. (See Analyst sounds warning.)
On Tuesday, Reiner reinstated Apple (AAPL), upgrading the stock to “outperform” and setting a 12 – 18 month price target of $135 a share. (The stock closed Monday at $94.58, up 4.22% for the day.)
But in a long note to clients, Reiner made it clear that while Jobs’ open letter Monday offered some reassurance, he remains skeptical.
“We don’t know what ails Apple’s CEO, and we’re not ready to assume that a problem with a ‘relatively simple and straightforward’ remedy is a problem that is itself ’simple and straightforward.’ Still, it seems unlikely that Jobs, the board, and its counsel would disclose the prognosis of a six-month recovery if it were at odds with doctors’ expectations.”
Reiner describes Jobs’ note — and the board’s accompanying statement — as an “attempt to balance the protection of Jobs’ privacy with the board’s fiduciary responsibility to disclose significant risk factors to the company.”
Apple’s lawyers must have vetted the letters with care, he says, so it’s incumbent on investors “to parse the missives with equal care.”
In Reiner’s parsing, the letters say that the board considers the risk to Jobs’ health to be “grave” — or in SEC parlance, “material” — although Jobs leaves the strong impression that the most likely outcome is a return to relatively normal health.
At the least, Reiner writes, the prognosis of a six-month recovery buys Apple some time. “‘The Apple community’ is now due an update in late spring, but until then the recovery will be allowed to run its course without undue prying.”
Meanwhile, however, Reiner has a long list of things we still don’t know, among them:
- Whether Jobs is currently engaging in his normal CEO duties
- What suddenly prompted him to seek out the root cause of his condition a few weeks ago
- What the long-term prognosis of his condition is.
In short, Reiner concludes, the leadership risk has not gone away, but it has become less acute, allowing investors to refocus on what he calls the heart of the Apple story:
- The Mac share gains
- The iPhone revolution
- The cash in the bank
- And the cash that’s still flowing.
For more on Jobs’ medical condition, see What’s going on with Steve Jobs’ hormones
“On the macbook I have been easily able to do things that you could never do with raw Windows without additional software, and actually I find that OSX does things better and with less hassle than Windows ever does.”
Hey AbuEmaan, did you ever hear of anti-trust lawsuits? Maybe you would realize that Microsoft was never allowed to do what Apple does and squash the competition by loading apps with the OS. Apple is able to do this since they have a less than 10% marketshare. I am forced to buy these apps as third party for that very reason, and to be honest with you I rather it be that way to allow for competition and better products. Strip those apps from Apple’s OS and what do you get? An OS with minimal apps to use, leaving you in the same boat. Apple is a competition squasher and thank god they do not have 90% market share because that would stiffle advancement outside of Apple leaving us all stuck with a controlling freak.
Hey Maddawg, I will bet you $10 that AAPL’s earnings, which are announced January 22nd, are 5% higher than last year’s holiday quarter. That’s $1.85 EPS for this year vs. $1.76 for last year.
I know it sounds strange for Apple to increase sales in these economic times, but it’s true. That’s because, unlike many competitors, Apple offers greater value over time. In times like these, people save their money for things that they truly want, and they don’t spend it on junk. People want value for their money.
I only hope that the share price reflects the outsized earnings.
I kind of disagree with your comments Eric. After having been a PC user for many many years… I turned to Apple and bought a macbook pro… Best computer I have ever had… love the operating system to bits. Yes, PCs seem to allow you to easily do what you want to do… but this is more to do with familiarity then reality. On the macbook I have been easily able to do things that you could never do with raw Windows without additional software, and actually I find that OSX does things better and with less hassle than Windows ever does. Oh, I have also an iphone… it’s fantastic, the best phone I have ever had. The goods are worth every penny! I have a PC also, which I will replace with an apple desktop.
Hope they outperform for the peoples sake. Some will see this and load up. Me, I rather not listen to these people in a time like this in our economy. Apple’s sales will level off eventually, but no one knows when that is. I haven’t heard any chest thumping out of Apple or anyone else about the sales of Mac’s during the holidays, which seems a little phishy to me. I think Apple holds a niche market for those that can throw away money and buy whatever they want. Apple has become mainstream and many that have bought in have realized that its a alot of hype, but is easy to use like a childs toy, so they hold back their regrets and beat their chests to feel better about it. Not saying they suck, just saying that its really not much to go bragging to everyone about. I don’t know of one thing that I can’t do on Windows or Linux, but the perception is that you can do so much more and so much faster. Apple has got to love perceptions, they have treated them well. Just take caution.
lol….i think sacto has been singing the ‘apple stock is gonna soar this year’ song for the last year and a half…
a few questions…
didn’t you notice the economy?
didn’t you notice the market?
didn’t you notice you’re the only one saying apple stock will have a good year in 09?
sounds like a hope-n-pray wish to me…
recheck your facts, your numbers and last but not least, don’t underestimate the other investors;
they are the ones that are moving the market….not YOU!
My suggestion is that Steve Jobs report weekly to Mr. Reiner on his condition. On top of that, he should also ask permission of Mr. Reiner to go to the bathroom.
Of course, I am being sarcastic. I have read three articles this morning, the one above being the latest. All are simply insulting at best. If I were Steve Jobs, I would be rightfully infuriated. He is no longer an individual with personal freedoms, but someone beholden to the whims of others. To say that Mr. Reiner and others like him are arrogant is a severe understatement.
Pity and compassion, not insulting inquisitions should be the order of the day. Instead, we continue to see vultures circling over Cupertino. Is anyone planning a national day of celebration and a group dancing on the eventual grave of Steve Jobs? It certainly seems to be the case here.
Yet, by contrast, I see no vultures circling above Omaha, despite the fact that Warren Buffett is getting older, and that he has not indicated who will eventually succeed him. Both Buffett and Jobs are considered essential to the success of their respective companies. But the laser-like inquisition focused on Steve Jobs and his family by the media is shameful at best.
It is little wonder why ordinary bystanders like myself are disgusted with Wall Street and much of the media. Hubris is a word that is simply not understood nor recognized by them.
“analysts” such as Yair Reiner aren’t really relevant, having the sole purpose of writing something for hire regardless of the crap content.
Who cares that he changed his mind?
Reiner’s grudging admittance that the Steve Jobs health issue was overblown might help a little bit in reversing the damage done to Apple stock by the tabloid-like coverage of this issue.
But I note he failed to list one of the biggest Apple “cores” of all – an increasing market share in computers.
The recession is a golden opportunity for Apple to dramatically increase market share. Why? Because people are finally waking up to the facts: (1) They build computers now that can run ANY software a PC can run; (2) they build high quality computers; (3) they have a stellar support system; (4) their OS is, simply, the best one out there; (5) their product line operates seamelessly between products; and last but not least (5) they completely out-innovate their competition.
This will be a good year for Apple stock.
Is this pump and dump or real concerns that Reiner has?
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
For me my mac laptop is about one thing:
Keynote
There is nothing comparable to Keynote for a PC. Keynote makes Powerpoint look and act like something that was created in the 1970s. It is so cumbersome and slow to use it amazes me that microsoft has not created a decent update of it. I will say one thing, the new version of PPT for the Mac is waaaaaay better than what is currently available for the PC (I use both). Anyone who hates apple has probably not lived with one particularly if you have to do presentations for a living like I do.