If you thought Apple (NASDAQ:AAPL) pessimism was done and dusted for now, a new research report is ready to spoil the bull party once again with some ominous news for the iPhone maker. Analyst Per Lindberg of Norway-based investment bank ABGSC Sundal Collier has initiated coverage of Apple stock with a rare Sell rating and a $400 price target. Shares were on an upward trend on Monday, up 0.30 percent at $587.02 in the afternoon.
What Led Lindberg to the Negative Analysis?
“For all its commercial success, marketing prowess and brand image, Apple is bound to enter a phase of much stiffer competition, far tougher comparisons, and, materially less generous operator subsidies,” Lindberg wrote in his report, according to Barron’s. Apple’s products were “no longer unique,” wireless providers were looking for alternatives, and customers were “suffering from ‘fashion fatigue’.”
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The company’s problems were showcased in the recent Maps debacle, according to the analyst. “The maps fiasco — affecting hundreds of millions of users of iOS 6 — serves as a crude reminder that all cycles of vogue eventually come to an end, as spirits of innovation give way to acts of protection — in quite vivid display today,” Lindberg wrote. “As judged by the lackluster reception of Apple Maps (wholly inadequate in terms of accuracy and completeness), iPhone 5 (plagued by iOS 6, manufacturing difficulties), and the mini-iPad (a rather immaterial size reduction of iPad 2), there are tangible signs that Apple no longer moves ahead at a pace required to avoid vicious price wars.”
The analyst added that he was anticipating sharply decelerating earnings growth next year for Apple, followed by “absolute erosion thereafter.”
Lindberg predicted $180.6 billion in revenue and $44.90 per share in net profit for fiscal 2013, below the Wall Street consensus of $193.09 billion and $49.95 per share. For the year after that, the predictions were for $186.35 billion in revenue and $40.17 in EPS, against the consensus $223 billion and $58.62.
CHEAT SHEET Analysis: Excellent Relative Performance Versus Peers is Under Threat
Competitors were stepping up their campaigns to displace Apple “as the architect of the world’s most popular ecosystem of software and services,” according to the analyst. Lindberg insisted that Google’s (NASDAQ:GOOG) Android was outselling iOS by a factor of four-to-five times in terms of monthly smartphone activations, Samsung was shipping nearly twice as many units of smartphones on an annualized basis, and the iPad was quickly giving up market share to tablets powered by Android and Microsoft’s (NASDAQ:MSFT) Windows 8.
Another factor going against the iPhone maker, according to the analyst, was its insistence on keeping its platform closed. “Unlike Apple, which remains tightly proprietary on both the hardware and software/services fronts, Google and Microsoft are making their ecosystems available to third parties (competitors and customers alike),” he wrote. “We take the view that in a market as large, as commoditized and as complex as consumer electronics, open systems will eventually push those that are closed, into obsolescence.”
How Will the Report Affect Apple’s Stock?
Apple was enjoying a green day on Monday before it started losing some of the gains toward the afternoon after this report was released. However, the announcement on Monday that the company was on its way to reaching its target of taking the iPhone 5 to 100 markets before the end of the year was likely to keep the stock afloat.
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