3 Reasons This Analyst Is Negative On Apple
Shares of Apple Inc. (NASDAQ: AAPL) have had a strong rally in the past month, fueled by strong numbers that the company reported in its quarterly earnings. Many analysts are positive on the stock, but Colin Gillis of BGC Partners feels that the company is approaching the top from where the declines may begin.
Gillis was recently on CNBC to discuss why it might be time to go negative on Apple.
"Apple's valuation now is clearly an outlier," Gillis said. "Now, it's a tremendous company and they are a profit machine. They are capturing all the profits in one of the most lucrative markets out there, which is the smartphone market, but there are some dynamics in this market that bear paying attention to."
1. Slowing Growth
"It's slowing down, the growth of the overall market is slowing down from this 20 to 30 percent. I's going to approach the growth of the overall phone market, which is closer to 5 to 10 percent."
Related Link: How Apple Could Add $100 Billion To Its Market Cap
2. Lengthening Of Upgrade Cycle
"The upgrade cycle for phones is likely to lengthen as features just become good enough. We see it in PCs which have an upgrade cycle of four to five years, TVs are 10, phones are only two so if that upgrade cycle happens and lengthens, it's going to be a negative for Apple."
3. Carriers Reducing Subsidies
"And then three, if carriers are less able or willing to subsidize phones, that's also going to be a negative for Apple."
When countered that all the arguments he made are well into the future and are less likely to have an impact in the short-term, Gillis replied, "No, there's very little that's going to pull this thing down in the near-term, except for perhaps the dividend disappointing investors, right? Maybe the [Apple Watch] comes in a little slower than people are expecting, but if we are not at the top, maybe close to the top."
Latest Ratings for AAPL
|Oct 2016||Goldman Sachs||Maintains||Buy|
|Oct 2016||Credit Suisse||Maintains||Outperform|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.