Analysts at Barclays on Wednesday downgraded four key hardware stocks from Taiwan after Apple Inc.’s sales guidance for the second quarter came in below expectations.
The research firm cut its recommendation on shares of Largan Precision Co. and Cheng Uei Precision Industry Co. to equal-weight, and on Foxconn Technology Co. and Simplo Technology Co. to underweight. All four stocks were previously rated overweight. The downgrade follows similar recent downgrades for Hon Hai Precision Industry Co. and Quanta Computer Inc.
Tuesday's earnings report marks the point at which Apple (AAPL) is officially no longer a high-growth tech stock, valued on its monster potential. Instead, it has become a cash cow, valued on its ability to pump hundreds of billions of dollars into its shareholders' pockets.
Goldman closes its gold short, the metal's move back above $1,400 triggering a stop. Still bearish though: "Our bias is to expect further declines in gold prices on the combination of continued ETF outflows ... as well as our economists' forecasts for a re-acceleration in U.S. growth later this year."
European stock markets moved higher at the open on Wednesday, extending a rally seen the prior day and with investors eyeing earnings reports from major firms such as Barclays PLC UK:BARC +1.42% and Heineken NV NL:HEIA -6.26% .
David Einhorn likes Apple's feisty share buyback : "We applaud Apple's decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple's management and board in the Company's future."
The insurance sector is broadly higher following the MetLife dividend hike. Worth remembering - Met (MET) is a special case, until recently under the Fed's regulatory thumb due to its banking operations (now divested). Maybe most interesting is AIG +4.1% as investors ponder the capital return possibilities
J.P. Morgan's Thomas Lee notes that several laggards in the first quarters of 2009-12 rebounded in Q2, so he figures select tech stocks look appealing now. Tech's forward P/E ratio is below the market's for the first time in 17 years, Lee says. His most noteworthy call is to buy Apple , which slid 16% Q/Q.
“American business will do fine over time,” Buffett writes. “And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor.”
He adds: “Since the basic game is so favorable...the risks of being out of the game are huge compared to the risks of being in it.”