Tag Archives: Analyst Bill Shope

Business, Finance, Occupation & Industry

Goldman Doesn't Think Hewlett-Packard Has Bottomed Yet

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By Evan Niu, CFA, The Motley Fool

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Shares of PC giant Hewlett-Packard were under heavy pressure today, down by as much as 6%, following an analyst downgrade from Goldman Sachs. Analyst Bill Shope is cutting his estimates on the broader PC sector, with unit shipments expected to come in weak during the first quarter.

After shares bottomed in November, HP has proceeded to more than double over the past six months as investors bet that the worst is behind HP. Shope, on the other hand, does not believe that HP is out of the woods yet, as the company’s turnaround story is still very much a work in progress.

The analyst not only points to deteriorating unit shipment volumes but also to continued pricing pressure that most PC OEMs face as they aggressively compete against each other. Most PC vendors are also expanding into tablet form factors, which generally carry lower prices, further adding downward pressure.

HP just reentered the consumer tablet fray with its Slate 7, which runs Google Android. While that low-end offering carries just a $169 price point, it’s certainly not positioned as a laptop replacement and is unlikely to cannibalize HP‘s PC sales. That’s not to say that other tablets won’t cannibalize PCs in general, though, with Shope expecting 40% cannibalization over the next two years.

Shope downgraded HP from neutral to sell and assigned the company a $16 price target. He notes that CEO Meg Whitman is embarking on a multiyear turnaround effort, but the rest of Wall Street is modeling for higher chances of success on the assumption that the business has already bottomed out.

That could lead to downward revisions in Street estimates in the next few quarters, which can be a painful process in itself. Even if HP benefits from its recent restructuring initiatives, the analyst sees those gains being offset by incremental weakness in the company’s core businesses.

HP may not have bottomed just yet.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP‘s rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market or is this a minor blip on its road to irrelevance? The Motley Fool’s technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why Apple Initially Rallied Despite a Goldman Cut

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By Evan Niu, CFA, The Motley Fool

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Here’s something you don’t see everyday: Apple shares initially rallied today despite analyst pessimism, though they ultimately gave up most of those gains. In recent times, the slightest inkling of analyst skepticism has been enough to trigger relentless selling, yet today Apple bucked that trend even after Goldman Sachs trimmed its models for the Mac maker.

No conviction
Analyst Bill Shope has taken Apple off of Goldman’s Conviction Buy list, although Apple is still a “buy” in his book. Shope also knocked down his price target on the Mac maker from $660 to $575. Apple wasn’t alone, as Shope has become negative on the broader tech sector, in part due to deteriorating conditions in the PC market.

Schope downgraded Hewlett-Packard from “sell” to “neutral” on the belief that shares have gotten frothy. HP had doubled from its November lows on investor hopes that the turnaround is progressing swimmingly, but Schope has pegged just a $16 price target on the PC giant.

Apple needs upcoming products to reinvigorate momentum, and Schope doesn’t believe the recent upgrades are driving market share gains as previously expected. The analyst acknowledges that Apple’s business model makes its cash flows “far more resilient,” but is still becoming less optimistic.

The downgrade is peculiar for a number of reasons. Just one and a half months ago, Goldman went to bat for Apple after Tim Cook spoke at the investment bank’s Technology and Internet Conference. Schope came out with some bullish comments, reiterating its Conviction Buy rating and $660 price target right before Valentine’s Day.

A couple weeks later, Goldman dubbed Apple the most undervalued stock within its coverage universe, based on prices and price targets at the time. How much can change in less than two months? Evidently, conviction doesn’t go a long way at Goldman.

A Chinese change of heart
Instead of focusing on the Goldman trim, investors are being encouraged today by reports that Cook’s apology to Chinese consumers has immediately begun paying dividends.

Over the past couple weeks, state-controlled media outlets in China have embarked upon a smear campaign, bashing Apple’s warranty and repair policies and (inaccurately) alleging that Apple’s policies put Chinese consumers at a service disadvantage relative to their U.S. counterparts.

The Chinese government has launched smear campaigns in the past against foreign companies, and Citigroup analyst Glen Yeung used HP as a proxy to estimate how much damage Apple could be facing. Back in 2010, China undermined HP in favor of local PC vendors, and HP ended up losing roughly half of their PC market share. By the same rationale, if Apple were to lose half of its China market, Yeung estimated that could amount to $13.1 billion in lost revenue.

That estimate made for some gloomy headlines yesterday that contributed to Apple’s 3% sell-off, but ultimately the figure is an incredibly broad overgeneralization. Apple’s trailing-12-month “Greater China” revenue (including retail) is currently $26.6 billion, so simply cutting that …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Apple Removed From Goldman Sachs' Conviction Buy List

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By Evan Niu, CFA, The Motley Fool

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Goldman Sachs has removed Apple from its Conviction Buy list, less than two months after reiterating the same rating in February. Analyst Bill Shope does not believe that the iPhone 5 has generated the levels of growth that investors were expecting, underscoring the importance of the next product launch.

Apple had been on the firm’s Conviction Buy list since December 2010, and Goldman still rates the Mac maker a “buy.” Shope reduced his price target on Apple from $660 to $575 to reflect lower estimates for fiscal 2013. The analyst now expects Apple to generate $190.3 billion in revenue in fiscal 2013, down from the previous estimate of $193.8 billion.

Shope expects the company to release an affordable iPhone to target emerging markets this year.

Like others, Shope believes that Apple will soon announce a way to use its massive cash pile for the benefit of shareholders. If the company announces a substantial dividend increase or a stock buyback, it could provide “a healthy floor” for the stock price, he said. Still, the analyst said that he believes the stock‘s outperformance over the next 12 months “will be more closely tied to the timing and success of Apple’s next batch of product refreshes.”

Apple’s stock fell $1.01, or 0.2 percent, to $427.90 in afternoon trading today, while the Nasdaq was up 0.2 percent. Apple’s stock price is close to its one-year low of $419, hit a month ago. It’s well off its all-time peak of $705.07, reached in September on the day the iPhone 5 went on sale.

The Associated Press contributed to this report.

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The article Apple Removed From Goldman Sachs’ Conviction Buy List originally appeared on Fool.com.

Fool contributor Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple and Goldman Sachs. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance