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S&P Equity Research Picks Apple Inc. Focus Stock of the Week
Jun 21, 2010 (05:06 PM EDT)


NEW YORK, June 21 /PRNewswire/ -- Apple Inc. (AAPL: $274) has been picked by Standard & Poor's Equity Research as its Focus Stock of the Week.  AAPL carries S&P's highest investment recommendation of 5-STARS, or Strong Buy.

"Over the last few years, Apple has transformed from the hip iPod maker to a leading-edge technology giant with a hand in some of the fastest-growing technology hardware markets," said Clyde Montevirgen, Information Technology Analyst at Standard & Poor's Equity Research.  "By competing in the smartphone, laptop, tablet, and retail markets, and outperforming formidable competitors along the way, Apple has effectively expanded its total available market size and renewed its long-term high-growth potential."  

Montevirgen thinks that investors with concerns about the sharp jump in Apple's stock price should look to the company's income statement to ease their minds.  He notes that revenues have advanced at a compound annual growth rate (CAGR) of over 20% over the last decade due to its success with Mac computers, iPod media players and iTunes.  Now that Apple has proven that it can have the same success in additional markets, Montevirgen forecasts a top-line CAGR of 27% from 2009 to 2012.  

"We see earnings growing faster than sales," said Mr. Montevirgen.  "Apple uses product refreshes and introductions, pricing strategies, and supply chain management to combat decreasing average selling prices and keep the cost of goods sold below that of sales.  Gross margins have expanded from 26% in 1999 to nearly 42% in the most recent quarter ending March 2010.  With its increasing mix of higher-margin products, such as MacBook laptops, iPhone handsets, and iPod Touch touchscreen media players, we see gross margins widening even further to the mid-40% range in coming years."

To view a video of Mr. Montevirgen discussing AAPL, paste the following link into your browser.  http://link.delvenetworks.com/media/?mediaId=1a329f9e4d3c425a92c308501261eb5f&width=480&height=411&playerForm=DelvePlayer

About Standard & Poor's Equity Research Services

As the world's largest producer of independent equity research, Standard & Poor's licenses its research to global institutions for their investors and advisors.  Standard & Poor's team of experienced U.S., European and Asian equity analysts use a fundamental, bottom-up approach to assess a global universe of multi-asset class securities across industries worldwide.  Follow Standard & Poor's equity analysts' U.S. market commentary each day at http://www.equityresearch.standardandpoors.com.

The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's.  Standard & Poor's does not trade for its own account.  The analytical and ethical conduct of Standard & Poor's equity analysts is governed by the firm's Research Objectivity Policy, a copy of which may also be found at www.standardandpoors.com or by clicking here.

About Standard & Poor's

Standard & Poor's Financial Services, LLC, a subsidiary of The McGraw-Hill Companies, Inc. (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.

All information provided by Standard & Poor's is impersonal and not tailored to the needs of any person, entity or group of persons.  Past performance is no indication of future results. Standard & Poor's and its affiliates provide a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers, broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from those organizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address.

S&P Global STARS Distribution

In North America

As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services North America recommended 35.9% of issuers with buy recommendations, 52.8% with hold recommendations and 11.3% with sell recommendations.

In Europe

As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services Europe recommended 37.9% of issuers with buy recommendations, 39.3% with hold recommendations and 22.8% with sell recommendations.

In Asia

As of March 31, 2010 research analysts at Standard & Poor's Equity Research Services Asia recommended 42.9% of issuers with buy recommendations, 49.1% with hold recommendations and 8.0% with sell recommendations.

Globally

As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services globally recommended 36.9% of issuers with buy recommendations, 50.1% with hold recommendations and 13.0% with sell recommendations.

5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis.

4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis.

2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price is not anticipated to show a gain.

1-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis.

Relevant benchmarks: In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are generally the S&P Europe 350 Index and the S&P Asia 50 Index.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you nor is it considered to be investment advice. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

This material is based upon information that we consider to be reliable, but neither S&P nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. With respect to reports issued to clients in Japan and in the case of inconsistencies between the English and Japanese version of a report, the English version prevails. Neither S&P nor its affiliates guarantee the accuracy of the translation. Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Neither S&P nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

SOURCE Standard & Poor's