Why Pacific Crest Remains Negative On Apple

Pacific Crest analyst Andy Hargreaves, who famously downgraded Apple Inc. AAPL last year when the stock was trading at $105 levels, continues to be bearish on the stock. He recently released a note to clients reiterating his views.

Hargreaves was on CNBC Tuesday to discuss what makes him remain negative on the stock.

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“Because I think it’s right, Hargreaves said. “I haven’t wavered because I still think that what you are essentially seeing is obviously fantastic demand that continues to have extraordinary retention, but I think we are seeing a pull in of people that are upgrading now that would have upgraded later that pulls demand from future quarters."

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He continued, “And I think we are also seeing sort of a one-time step up in the share gain around the larger screen phone that I don’t expect to repeat next year. So, I still see basically declines in iPhone when you get to the back half of this year and that creates a growth hurdle.”

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“Well I mean everybody is looking at the Watch, right?” Hargreaves replied. “And that’s coming and clearly the company has really high expectations for what that product is going to be, what it’s going to do both in terms of sales volume and profit production, but in terms of how people are affected and I am more conservative. I can’t decide what that product is going to do.”

“We have a lot of it in our numbers, but it’s really hard to make for an iPhone decline because that thing is so profitable and even our Watch expectation, I think the risk is to the downside preferably.”