Wall Street analysts are typically not an investor’s best friend. They usually place favorable ratings on stocks after they’ve had a bullish run and the easy money has been made. This sets impressionable investors up for the inevitable fall when earnings growth slows, or goes negative, and the stocks collapse. Subsequently, ratings on the stocks are reduced after the damage has been done, and investor’s portfolios have been irreparably damaged.
It was no different with analyst Will Power this month.
On January 7th, with Apple (AAPL) trading around $525, Power, senior analyst at R. W. Baird, said, “We continue to like Apple…that’s our top pick and, really, I guess our refrain has been the more things change, the more they stay the same. We like Apple on the weakness.” Power issued an “outperform” rating on the stock and touted a $750 price target.
How things can change in three weeks.
This week (Monday, January 28th) Power released a gem of an analysis on Apple stating, “We think there is a real downside to estimates, and it’s going to be tough for the stock to outperform over the next several months.” He downgraded AAPL from “outperform” to “neutral.” The new price target….$465! This revelation from Power came after AAPL released some less than expected sales numbers and closed out a horrible week where the stock dropped 60 points to close Friday at $440.
It appears Power was in error and really doesn’t like AAPL on weakness.
Power likes shares of Apple on January 7th:
Power doesn’t like shares of Apple on January 28th and voices a litany of concerns regarding their growth prospects: