Those that know us are familiar with our disdain for most financial analysts - especially those in the tech sector who cover such companies as Facebook and Apple and everything in between. They panic, they drive stocks up and down with no real rhyme or reason and far more often than not make their recommendations - whether positive or negative - on little more than shoestring/in the moment-level information. Why does anyone listen to them?

Yesterday, we noted that Piper Jaffray analyst Gene Munster was busy prognosticating on possible Apple 2014 iWatch sales, wherein he suggested Apple could sell five to 10 million iWatches in 2014. We suggested different numbers ourselves. And late yesterday afternoon, we took note of another Apple prognosticator of note, who re-emerged to further enlighten us.

This latest to prove our point is Jeffries analyst Peter Misek, who has suddenly had a significant change of heart about Apple. Misek, who is considered an "Apple insider," relative to what he is supposedly able to discern about Apple has suddenly changed his now former $425 target price on Apple to…$600 per share, and has changed his recommendation from a hold to a buy. Wow! Just like that. It's astounding.

All of this is based entirely on a recent Asia trip which he claims showed him a "substantial shift in attitudes toward Apple." The shift supposedly reflects a new found sense on his part that Apple's Asian suppliers are not going to be able to squeeze Apple on prices thereby leaving Misek to conclude that Apple will be able to deliver better margins than he had previously thought. Here are his words on this:

"Despite still seeing risk to CQ4 and FY13 revs, we now believe better GMs will allow Apple to skate by until iPhone 6 launches with its 4.8" screen…50 percent of smartphone shipments have >4" screens and that iPhone 6 will catalyze a large upgrade cycle. The stock is attractive based on the attitude change, FY15 revs >+15 percent, and valuation."

Further, following the Misek trip Jeffries has raised its Apple Q4 2013 EPS from $8.14 to $8.36, fiscal year 2013 EPS from $39.66 to $39.87 and - here is the bigger news…fiscal year 2014 EPS from $37.95 to $44.22.

Oh Hey, a 4.8 Inch iPhone

Did you catch that little bit of news that was snuck in there?

Misek claims - actually he states - that next year's iPhone 6 will have a 4.8 inch screen. Let the rumors begin. 


image via idownloadblog

Misek suggests that since the market for large screen smartphones supposedly makes up at least half of all smartphone sales,  the likelihood of Apple capturing a whole new market segment for itself (we love the phrase: "iPhone 6 will catalyze a large upgrade cycle") will be substantial. And Misek now believes that Apple will be able to deliver the new screen size while still pulling off hefty margins.

Well, the real question is, why hadn't Misek figured out Apple's long term strategy - which we've outlined in detail ongoing without taking any trips to Asia - and why was he among those who drove Apple's stock price down to below $400 in the first place based on nothing more than a gut reaction to margin pressure Apple was seeing as the company transitioned from Steve Jobs to Tim Cook? Where was the real insight? Where was the ability to discern real long term strategy on Apple's part? Where was the recommendation to understand, trust and believe Apple would deliver longer term?

Instead, lots of investors ended up screwed as mostly blind financial analysts drove down the stock. Now we have Carl Icahn seizing all sorts of opportunities to buy low and ultimately sell high. If the financial analysts had any real insight, they would have known to keep Apple above $600 - where it should have stayed. It is maddening to see these "experts" issue declarations that either drive up or drive down stock prices on so very little insight.

We will further note that Misek also pointed out in his note that he has a negative sense of the iPhone 5c. He foresees Apple will have to cut the price on it. Well, that is another brilliant insight.

Yes, of course Apple delivered the high end of the low-priced smartphone category, as we've always noted it would. And yes, we've already often noted that Apple and the carriers will adjust the prices downward on the iPhone 5c as the landscape of available buyers at different price points evolves and changes over time. Of course that will happen and the iPhone 5c will drop in price as part of a well thought out strategy - not as a knee jerk reaction to slow sales.

And as we’ve long said, Apple will absolutely come out with its own larger screen iPhone. But it will do so only at its own pace, and only when it is ready to do so with a product that will trump the competition in both innovation and high-end style. We personally believe that a larger screen iPhone will emerge as an enterprise mobile device in 2014 - albeit one that will also have a great deal of consumer interest. We don't mean to say that Apple itself - a pure, consumer-focused company by its own definition - will tag it as an enterprise iPhone. It will just work out that way.

There is nothing mysterious here. Apple's longer term strategy is crystal clear and the stock is clearly worth $700 a share and should have remained there. If only financial analysts were able to make any real sense of long term strategy. Sure - they regale us with fancy long term charts and timelines that ultimately never line up with reality. Instead we get the knee-jerk reactions. Facebook and Apple are merely the most recent, and the two most prominent examples.

Investors - always beware.