Apple shares up despite Galaxy S4 threat
Analysts on new Samsung handset: ‘Evolutionary, not revolutionary’
new
March 15, 2013, 10:58 a.m. EDT
By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) — Apple Inc. picked up some gains Friday
morning as analysts remained mostly positive on the company following
the debut of the new Galaxy S4 smartphone from archrival Samsung
Electronics Co.
Reuters
Apple’s
AAPL
+1.94%
shares were last up 1.7% to $439.70 in mid-morning trades. The previous evening, Samsung hosted a media event in New York City,
where it introduced the Galaxy S4 and said it planned to launch the
handset in more than 150 countries starting in late April. The new
handset features a 5-inch touchscreen compared with the 4-inch size of
the current iPhone 5.
The Galaxy S4 is expected to be the main competitor this year to the
iPhone. It’s launch will likely give it a full quarter’s headstart — at
least — against any new handset from Apple, which most analysts do not
expect until sometime after the company’s Worldwide Developers
Conference, which typically takes place in early June.
“While the S4 is likely to be the iPhone’s biggest competitor this year
at the high-end of the market, we remain confident in our iPhone
estimate for this year of 177.5 million, which includes a cheaper phone
in the September quarter,” wrote Gene Munster of Piper Jaffray in a note
to clients on Friday.
Munster, who has a buy rating and $767 price target on Apple, added that
the S4 is “unlikely to meaningfully impact iPhone share of the high-end
over the full year, but do expect it to take share from other Android
phones.”
Not all agreed. Stuart Jeffrey of Nomura wrote that “while clearly a
step forward relative to the S3, there is much that is evolutionary
about the S4, rather than revolutionary.” But he kept his rating on
Apple’s shares at neutral, and his price target at $490 a share.
“Nevertheless, we see the S4 potentially helping Samsung to overtake
Apple in high-end smartphone shipments during 2013,” he wrote.
Apple’s shares have been hammered by a harsh selloff since the company
launched the iPhone 5 in late September. Even with Friday’s uptick, the
stock is down more than 37% from its level at that time. Part of the
drop has been attributed to investor worries about the growth prospects
for the iPhone in the face of heavier competition from Samsung.
“We are amazed by how analysts and the media have turned on Apple during
the recent stock downdraft with statements that Samsung is
‘out-innovating’ Apple,” wrote Brian White of Topeka Capital, who’s $888
price target on Apple is the highest on Wall Street. He called the S4
“a refresh but NOT a game changer.”
Samsung
KR:005930
-2.63%
already outsells Apple in the global smartphone market, accounting for
more than 30% of total shipments in 2012 compared to 19% for Apple,
according to IDC estimates. Samsung saw the highest growth for the year
of all smartphone vendors, the firm said.
Some analysts believe the Galaxy S4 will heat up competition for Apple
at the high end of the market. Abhey Lamba of Mizuho Securities rates
Apple as a buy with a $575 price target, but wrote to clients on Friday
that “Samsung’s latest smartphone sports better hardware features and
offers tighter integration with other home entertainment devices.”
Samsung Unveils Galaxy S4
Samsung Electronics unveiled its fourth-generation Galaxy S smartphone Thursday. Among the new device's features is a function that lets users control the smartphone screen with their eyes. MarketWatch's Dan Gallagher reports.
“While the phone might not offer significant incentives for iPhone users
to switch over, it clearly offers an attractive alternative at the high
end of the market,” he added. “Apple needs to keep enhancing its
offerings to compete well in the space.”
Shaw Wu of Sterne Agee cut back his price target on Apple’s shares on
Friday to $630 from $715 — keeping his rating at buy. In his report, he
cited checks indicating a cut back in iPhone build orders and said the
company would likely hit the low end of its guidance for the March
quarter.
“We continue to believe Apple is leaving money on the table by not
participating in larger touchscreen form factors dominated by Android
vendors,” Wu wrote. “But more importantly, we believe Apple needs to
reclaim high-end leadership, as that is what its brand is about.”
Wu added that he is seeing evidence in the supply chain of a larger
iPhone in development, “but given its early stage, we don’t believe we
will see it ship until 2014.”
Dan Gallagher is MarketWatch's technology editor, based in San Francisco. Follow him on Twitter @MWDanGallagher.
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