Apple’s Diving into “Many Firsts” Today
All eyes are peeled to Apple Inc. (NASDAQ:AAPL) today as the tech titan is on the fringe of hosting an event today at the Steve Jobs Theater in the new Apple Park. The grand reveal? The Street is looking for three new iPhones underway coupled with a likely introduction of a new Apple Watch complete with LTE cellular network connectivity, where the new feature could allow users to make and receive data as well as calls without needing to have an iPhone on hand. Additionally, among other prospective unveilings could be a new Apple TV.
This will mark “a different kind of iPhone event with many firsts on the docket for Apple,” cheers Drexel Hamilton analyst Brian White.
Ahead of the event, the analyst reiterates a Buy rating on AAPL stock with a $208 price target, which represents a 28% increase from current levels. (To watch White’s track record, click here)
White notes, “We continue to believe Apple’s stock will not only benefit from the upcoming iPhone cycle but also the company’s capital distribution initiative, attractive valuation and potential new innovations. As such, we do not believe Apple’s run will end with this week’s iPhone event but still has attractive upside potential.”
What makes this such a “different” evolution of Apple’s usual iPhone launch? The “totally new venue” for the titan’s usual iPhone reveals, explains the analyst, who continues, “we expect a record number of new iPhones (5.8-inch iPhone ‘X’, 4.7-inch iPhone 8 and 5.5-inch iPhone 8 Plus) to be unveiled in one sitting and we believe Apple will extend its reach into the ultra-luxury smartphone market with the most expensive iPhone in the company’s history (~$1,000), the iPhone ‘X.'”
Apple making an augmented reality splash will also be key, contends White, asserting: “This event will also mark Apple’s plunge into augmented reality (AR) with 3D sensing capability expected on the iPhone ‘X’ and further supported by ARKit that was unveiled at WWDC in June.”
Though there were anxious rumors of high probability for a “major” iPhone X delay, one which White acknowledged back in April, after the companies in his Apple Monitor index, which tracks sales of nine ‘important’ publicly-traded Apple suppliers based in Taiwan, reported sales between June through August reflecting “stronger than seasonal trends,” the analyst is far less concerned. Nonetheless, keep an eye out for supply constraints all the same, White warns- a morsel of advice from a bullish vantage point.
A lot on the Street are clamoring behind this tech titan, as TipRanks analytics exhibit AAPL as a Buy. Out of 33 analysts polled by TipRanks in the last 3 months, 24 are bullish on Apple stock while 9 remain sidelined. With a return potential of 6%, the stock’s consensus target price stands at $171.93.
GoPro Has Oppenheimer Recognizing an Encouraging Turnaround Strategy
Ever since GoPro Inc (NASDAQ:GPRO) updated its third quarter outlook, investors have taken kindly to the revision, sending shares rising 6% yesterday and over 14% last Thursday after revenue and gross margin were bumped up to the high end of prior expectations.
Oppenheimer analyst Andrew Uerkwitz is cautiously optimistic on the wearable action camera maker, particularly following hosting a meeting with management, where the analyst spoke with CFO Brian McGee, COO Charles Prober, as well as IR rep Alex Wellins. After holding a series of investor meetings last Friday in New York City,
Uerkwitz offers these key takeaways from his meetings: “Discussion topics kept a consistent theme across the meetings: new product launches and the strategy to ensure a sustainable and profitable future GoPro. This strategy centers around three points including growing target audience: 1) TAM expansion on recent focus of “GoPro an extension of phone camera”; 2) Continued international push into emerging markets; and 3) Growing wallet share in advanced users. While we didn’t hear anything new, we walked away more confident in the company’s turnaround strategy. We like the continued attention to winning back investor confidence through execution and setting realistic, grounded targets for future growth drivers […]”
As such, the analyst maintains a Perform rating on shares of GPRO without listing a price target. (To watch Uerkwitz’s track record, click here)
In the grand scheme of GoPro’s opportunity, though Uerkwitz continues to survey the stock form the sidelines “for now, ” he also points to having “been impressed with execution of the turnaround. We believe sustainable growth relies on leverage in the model. In our view, top-line growth has to come from software-to-hardware conversion. Note regarding model: we will update post quarter and doesn’t reflect pre-announcement.”
Most of Wall Street echoes Uerkwitz’s vote of caution, with TipRanks analytics demonstrating GPRO as a Hold. Based on 7 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on GoPro stock, 4 maintain a Hold, while 2 issue a Sell on the stock. The 12-month average price target stands at $7.83, marking a 28% downside from where the stock is currently trading.
Snap Gets a Downgrade
Snap Inc (NYSE:SNAP) has Deutsche Bank analyst Lloyd Walmsley extra cautious on the popular Snapchat app parent company’s opportunity from an advertising stance, particularly after recent industry discussions are proving to be “mixed,” with intrigue increasingly “waning.”
Sure, Snap has enhanced its advertising tech plays. However, industry chatter indicates “a reduced imperative for advertisers to experiment with Snap advertising.” When shark rival Facebook has bettered its copycat moves for its Instagram acquisition, the tech world is understandably hesitant on Snap’s place at the advertising table.
In reaction, the analyst takes a sharp left to the sidelines, downgrading from a Buy to a Hold rating on SNAP stock while lowering his price target from $20 to $17, which implies a 10% increase from where the stock is currently trading. (To watch Walmsley’s track record, click here)
With advertiser interest unfavorably dipping, the analyst has reduced his Snap revenue forecasts for 2017 from $1.9 billion down to $1.6 billion while pulling back on 2018 expectations from $3.2 billion down to $2.9 billion.
After spending weeks talking to advertisers, API partners, as well as content partners alike in the Snap/advertising sphere, unfortunately, “[…] just as the company makes progress with its ad systems, the narrative in the ad community has become more challenging.”
Though ad tech infrastructure changes have been at work for the social networking platform, all positive feedback “has been limited” at best. More distressing to Walmsley is shrinking interest in general, considering where Snap was a year ago compared to today’s frustrating publicity circling struggling DAU growth and daunting competition. When Facebook offers a “Snap-like product on a better ad system where advertisers are already spending a lot of money and feel very comfortable, marketers are just not as interested in Snap,” opines the analyst, elaborating “The exciting new platform buzz seems to have shifted to Amazon of late.”
While sentiment is not without hope should Snap elicit the kind of DAU growth comeback that could newly captivate the Street or should ad system improvements generate “compelling” ROI, the clock is ticking, says White. Fearing that with the back half of 2017 approaching, Snap’s short-term risk outweighs its rewards, leading him to leave his bullish case behind for now.
Ultimately, “We think Snap ad tech is improving and underappreciated by most investors and advertisers, […] Over time, [Snap] should attract more ad dollars, but the second-wave API partners for Snap still have less confidence in ROIs than their initial counterparts, but budgets are still ramping from some clients on wave 2 API partners,” White surmises.
Walmsley joins a cautious party out on Wall Street, considering TipRanks analytics showcase SNAP as a Hold. Out of 27 analysts polled by TipRanks in the last 3 months, 8 are bullish on Snap stock, 14 remain sidelined, and 5 are bearish on the stock. With a loss potential of nearly 2%, the stock’s consensus target price stands at $15.02.