Apple Inc. (AAPL) Q1 Does Not Impress This Analyst

Apple Inc. (AAPL) Q1 Does Not Impress This Analyst

Are Apple Inc. (NASDAQ:AAPL)’s latest stats really that impressive?

The Latest Apple Headline

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Apple Inc. (NASDAQ:AAPL) announced last week that they added $30 billion to its stock-buyback plan, alongside the release of their Q1 earnings report. Investors were smiling when they heard that the stock would be split 7 for 1, and were pleased to hear of Apple’s $45.6 billion in quarterly sales and net profit of $10.2 billion. However, even though iPhone sales were strong, iPad sales fell from 19.48 million the same quarter a year ago to 16.35 million this year ago. Sales were far from analyst expectations of 19.38 million.

An Analyst Perspective

BGC Partners analyst, Colin Gillis, reiterated his HOLD Apple Inc. (NASDAQ:AAPL) rating, focusing on the company’s short-comings from their latest report. Colin pointed out, “Investors are excited about better than expected iPhone sales, but unit growth of 17% YoY still materially lags industry growth of approximately 24%. iPad sales, taken from the most favorable view point of sell thru, declined a surprising 3% YoY.” Colin “does not suggest chasing the stock,” as he also sees “risks for Apple’s ability to retain customers at lower price points as phones from companies such as One.Plus, Xiaomi, or the Nexus line, offer new technology at lower prices.” Colin has recommended Apple in the past and has earned a +6.0% average return over S&P-500 on the stock and a 67% success rate recommending the stock. His success with Apple has helped earn him an overall +3.4% over S&P-500 and a 56% success rate of recommendations.

Apple AAPL -1

Colin Gillis’s Past Recommendations

Colin’s previous recommendation to BUY Apple Inc. (NASDAQ:AAPL) in October of last year was just one of his successful AAPL recommendations. Colin pointed to several positive factors that added to the growth of the stock including, “a higher capital program of $100 billion,” the launch of Apple’s iOS7, and the release of its new line of iPhones, iPads and computers. Colin was expecting revenue for the “September quarter to come in at $36.9 billion, which is a rise of 2.7% year on year and 4.6% sequentially,” and his BUY Apple recommendation ended up earning him +2.9% over S&P-500.

Apple AAPL -2

Colin also recommended BUY Apple Inc. (NASDAQ:AAPL) earlier in June of 2013. After beating Q3 fiscal expectations, Colin stated, “We are positive on Apple shares in front of the product refresh,” even though he noted that, “industry dynamics of lower pricing and stronger competition are growing negatives for Apple.” Colin’s confidence earned him +22.4% over S&P-500.

However, of his 7 recommendations for Apple Inc. (NASDAQ:AAPL), Colin has experienced two unsuccessful results, including his BUY AAPL recommendation from April of last year. Colin was anticipating that, “any positive news about the next product cycle could be a catalyst for the stock to move toward $500.” He argued, “We are not saying that the challenges facing Apple as the tablet and smartphone markets evolve are going away (declining ASPs, saturation of developed economies, lackluster innovation), but it is possible that the pessimism surrounding the stock could lift as we approach the next product refresh cycle.” However, the stock did not respond as Colin had expected and he ended up with -1.5% over S&P-500.

Colin has also recommended similar companies to Apple Inc. (NASDAQ:AAPL), including SELL BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) in early April of this year. After the announcement that BBRY would not be renewing its contract with T-Mobile after its expiration, Colin noted “It’s not a positive.” The company also decided to change strategies to focus “more on software and targeting  a narrower customer base,” leading Colin to recommend SELL BBRY. He earned +10.0% over S&P-500 from this recommendation, adding to his overall average return of +9.2% over S&P-500 on BBRY.

And Colin earned one of his highest returns recommending SELL BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) in June 2013. Before the release of BBRY’s Q1 report, Colin reiterated his SELL rating with a haiku: “This is the quarter, when the squeeze could come but yet, the shorts seem to calm.” Colin was not convinced that the latest Z10 phone would result in a steady sell-through, arguing, “While we remain generally positive on the changes that the new management has effected, we mention that just as BBRY has a product to compete in the high end market, that market is showing signs of slowing down and the competition is rotating to mid and low-priced smartphones.” Colin earned +49.8% over S&P-500!

After taking a look at Colin’s recommendations, it is clear that he has followed Apple Inc. (NASDAQ:AAPL)’s history very closely and with a keen eye. Will you be HOLDing on to your AAPL shares?

Jordan Faigen covers financial investments and the latest stock market news. She can be reached at [email protected]

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