Apple Event Failed To Impress Some Stock Analysts

Even with some streaming hiccups, I was able to watch the entire Apple Event introducing the new iPhone 6, iPhone 6 Plus and Apple Watch and I got to say I was very impressed. Even though some analysts and tech pundits feel lack luster after the Apple Event, I felt a genuine excitement from Tim Cook for the first time since he took over for the late Steve Jobs. Yes Steve could work a crowd. Knowing that you are loved by many also helped Steve’s mega ego but Tim is not the same. Brilliant, focused and dedicated yes, but he does seem to lack the “it” factor Steve had on stage. But this Apple Event was different. We know Tim now and I felt it. I saw him genuinely excited and I think there is now an ownership and confidence that he has emerged from Steve’s shadow and can definitely run Apple. I watched closely as he showed the Apple Watch. His face told the story. He had done it. He created something that he has every confidence in will be a quality new product for Apple. Why am I talking about this? It’s because I read something by Warren Buffet, the billionaire financial genius behind Berkshire Hathaway. He said that he looks at a lot of things before buying a company and one of them is the management that runs it. I think Tim is now on top of his game and the Apple management team very capable.

So why then are the stock analysts downgrading Apple Stock from “outperform” to “perform”? Well did the iPhone 6 and iPhone 6 Plus fail to impress? Was it iOS 8? No, they actually were impressed with the new range of iPhones but think that there will be a decline after the iPhone 6. Even with the impressive new iPhone 6 range US-based Pacific Crest said that it had already factored the impressive new iPhone 6 range into the current stock price. So then why wasn’t the stock downgraded before the Apple event then? They already had all the information they needed and it does not seem there was anything Apple could have done beyond “impress” Pac Crest anyway. To me it seems like someone is beating their chest and trying to steel some limelight.

Pac Crest went on to say that they were sure that Apple loyalty would would drive strong sales and profit, but that the Apple Watch was not proven and was entering an unsure market. So with the uncertain future sales of the Apple Watch, Pac Crest said that:

"However, unless Apple Watch proves to be a surprisingly large mass-market hit, we believe multiple contraction will offset earnings growth over the next year and prevent significant stock appreciation."

"Apple Watch is attractive, but the need for phone tethering, short battery life, and lack of compelling features for people who do not want a watch will limit the market, in our view," Pac Crest’s note said.

I do agree with their assessment here and think that the Apple Watch will have a tough time in a smaller market. I am also not a fan of having to tether the watch to the phone either. I hope future releases will have a stand alone watch option.

Other Analysts were even less impressed such as Peter Garnry, head of equity strategy at Saxo Bank that dubbed the event "the night Apple became average". Peter said that increased competition and lack of "blockbuster" innovation would start to impact Apple and start the company spiraling down.

Apple will be getting my money for an iPhone 6 Plus but right now I am not so sure on the Apple Watch. The main purpose I want it is to not have to carry a phone around with me. I may be tempted if the Nike App will stand alone and sync with my iPhone when back in range. Still, no text messages or ability to communicate in case of an emergency certainly limits the value for me while running or biking. Using an armband with the 5S is not so bad. The iPhone 6 Plus may turn out to be more than I want to carry while going on long runs and not having a watch option does not sound to exciting to me.

Apple Stock today is up 1.46%