Piper's Munster Lowers '09 Estimates Across Internet and Online Content Spaces
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Bullish Piper Jaffray analyst Gene Munster is lowering 2009 estimates across the Internet and Online content spaces, citing the significant deterioration in the economic and consumer spending outlook.
Munster said the savings rate in America will increase significantly over the next few years, following 25 years of increasing leverage and a declining savings rate. He also assumes total non-travel eCommerce sales will decline 10% in 2009 and total online advertising will increase 2% in 2009. Munster expects online travel space will be particularly impacted by further job losses, lower wages and bonuses, lower availability of credit.
Munster said, "Our consumer spending outlook is based on looking at the key drivers of consumer spending, including employment, average employee earnings, consumer credit, total household wealth, inflation on necessities such as food and energy, and consumers' preferences for spending vs. saving. We believe that five of these drivers, with the exception of food and energy inflation which has recently been moving in a positive direction for consumer discretionary spending, will continue to move against the consumer, further pressuring consumer spending through 2009. We believe the fourth quarter of 2009 will begin to show signs of stability given it will comp against the weak current December quarter."
Top picks remain Apple (Nasdaq: AAPL), Adobe (Nasdaq: ADBE), Baidu.com, Inc. (Nasdaq: BIDU), Dolby Laboratories Inc. (NYSE: DLB), Google Inc. (Nasdaq: GOOG), Netflix, Inc. (Nasdaq: NFLX).
Munster said the savings rate in America will increase significantly over the next few years, following 25 years of increasing leverage and a declining savings rate. He also assumes total non-travel eCommerce sales will decline 10% in 2009 and total online advertising will increase 2% in 2009. Munster expects online travel space will be particularly impacted by further job losses, lower wages and bonuses, lower availability of credit.
Munster said, "Our consumer spending outlook is based on looking at the key drivers of consumer spending, including employment, average employee earnings, consumer credit, total household wealth, inflation on necessities such as food and energy, and consumers' preferences for spending vs. saving. We believe that five of these drivers, with the exception of food and energy inflation which has recently been moving in a positive direction for consumer discretionary spending, will continue to move against the consumer, further pressuring consumer spending through 2009. We believe the fourth quarter of 2009 will begin to show signs of stability given it will comp against the weak current December quarter."
Top picks remain Apple (Nasdaq: AAPL), Adobe (Nasdaq: ADBE), Baidu.com, Inc. (Nasdaq: BIDU), Dolby Laboratories Inc. (NYSE: DLB), Google Inc. (Nasdaq: GOOG), Netflix, Inc. (Nasdaq: NFLX).
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