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Best tech/finance blogger on TipRanks. Alex Cho is ranked 7th among all financial bloggers, with a sector focus of technology stocks. The research he publishes captures the long-term growth potential of tech franchises, and market valuation. His research recommendations over the span of five-years has averaged into an annualized return of 19.3% across 392 ratings of which 66% were successful. Over his years of publishing, Alex Cho has been an indispensable source of information for an investment minded audience, which is why his lifetime viewership has exceeded ten million in total since 2012, across various media platforms. Furthermore, he’s frequently cited in various local business journals across the United States, and is frequently tagged with the “in-depth” designation on Google News for his public articles. The quality of his research is well known, and is well-respected which is why he’s frequently cited by other authors, journalists, bloggers and experts. Alex Cho was a former founding partner of Alexander & Cohen Capital Management, has worked as a consultant for mid-stage tech companies looking to raise capital or form an exit strategy, with the most recent consultation billed to a client that was generating revenue of $10 million+ in the web domain/registrar segment. Alex Cho is frequently invited to interview members of management at various Fortune 500 tech companies’ due to his outstanding media credentials, and credibility. Furthermore, he frequently attends various tech media events at the request of the event organizers. Alex Cho has a great relationship with Wall Street and Silicon Valley, as well. In the Venture Capital Space, he has sources that are inclusive of VC Partners, and independent research from PitchBook, Mercury Data, eMarketer, MergermarketGroup, and so forth. Anyone facing the public with investment related material needs quality sources, which should be inclusive of insights from Private Equity and various sell-side institutions and debt rating agencies as well (Standard & Poor’s, Fitch, & Moody’s). Alex Cho publishes with the support of Bank of America Merrill Lynch, Morgan Stanley Americas, Royal Bank of Canada Capital Markets, United Bank of Switzerland AG, Barclays Americas, Goldman Sachs, J.P. Morgan, Credit Suisse AG, PiperJaffray, Wedbush Securities, Oppenheimer & Co., Nomura Securities, BMO Capital Markets, Raymond James, Pacific Crest, SunTrust, Mizuho Securities, Deutsche Bank and Canaccord Genuity. Alex Cho attended ASU via the MAPP program with a 3.76 GPA in business-finance. The genius behind Cho has less to do with his academic accomplishments, but rather his ability to navigate, adapt, and improve the quality of his work through all the activities he has engaged. In the past year, Alex Cho has launched a new marketplace service referred to as Cho’s Investment Research. To learn more about this service, or to receive article notifications, be sure sure to subscribe. We provide frequent updates via our Blog Posts, which goes out to our subscribers.

Apple’s (AAPL) iPhone: Is This Really a Recovery?

Apple (AAPL) could be experiencing a much-needed turnaround or improvement in shipments for iPhone devices, according to UBS analysis. The good news tied to the Asian supply-chain might have been missed, as a couple investment banks downgraded Apple stock this past week (New Street Research and HSBC). While some of the comments relating to Apple’s demise pertain to the aging installed base, and diminished growth in first-time iPhone buyers, the Chinese narrative is expected to improve based on more recent supply chain channel checks.

The stock has remained sideways/flat for the past couple days despite running all the way up to $200 per share. Some of the momentum was tied to service revenue and the launch of new services, but another major reason has been the recovery in equity prices in general, which Apple has been a beneficiary of. But, a third potential catalyst is a recovery in Chinese iPhone shipments, which could play out over the course of 2019 until we have an updated slate of iPhone’s to work with in September.

UBS Analysis, Timothy Arcuri mentioned that March Chinese iPhone shipments have improved from what were already dismal results in the region:

Analysis of monthly government smartphone sell-through data from China suggests the annual rate of decline for Apple iPhones improved slightly in March (down 61% YoY vs ~68% in the prior three months). Sequential MoM growth of 67% in March was higher than ~40% a year ago based on our estimates since prior year data by operating system was unavailable. Apple likely benefitted from overall China smartphone market improving (down 4% YoY vs double-digit declines in 8 of the prior 9 months and sequential improvement of 93% was higher than 60% a year ago) as well as its price actions being effective. Overall, the data is slightly positive because iPhone is a top issue for investors and the sentiment appears to be neutral.

Initial read-through from the Chinese market suggests a meaningful improvement in monthly comparisons from March versus February and January. Assuming, March shipment inflection continues the financial outlook from Apple might improve when they announce earnings on April 30th, 2019.  Apple blamed the poor performance from its iPhone unit due to a decline in shipments from the China region.

It’s worth noting that the smartphone market in China had pulled-back in general by double-digits or 10%, according to IDC in 2018. So, the softness in iPhone results weren’t isolated to just Apple, but other smartphone OEMs as well. IDC also reported that global smartphone shipments declined by 4.1% in 2018 globally, so the shipment narrative has been weak for all smartphone OEMs including Apple, and the semiconductor companies that supply parts to mobile devices.

The sentiment has weakened to new lows for Apple with most having a neutral bias according to a UBS Survey:

The sentiment on Apple is neutral with 47% indicating “neutral” and roughly similar percentages for “bullish” at 28% and “bearish” at 23%. The sentiment is down from October when nearly 70% were indicating “bullish” or “very bullish” sentiment. The neutral stance is in line with the data from UBS Quantitative Research team showing AAPL as one of the biggest global underweights among active investors. It could suggest further upside potential if iPhone performs in line to better.

Bottom Line

Investors have already diminished their expectations tied to iPhone units/shipment figures, which sets-up investors for a potential beat on financial results tied to a recovery in the second half of 2019. Smartphone weakness might not continue for much longer, and with prior-year shipments so weak to begin with a modest recovery could swing some bullish momentum back into the stock, especially if financial outlook from Apple surprises by a couple percentage points due to a shipment recovery in China. Also, with every other smartphone OEM exposed to the same weakness in smartphone shipments, Apple does remain best-in-class, and could weather this storm more effectively than what investors or current consensus expectations imply.


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