Apple, Coinbase, DocuSign on the move following Wall Street analyst calls

Yahoo Finance Live anchors discuss stock performance for Apple, Coinbase, and DocuSign after the latest analyst ratings from Wall Street.

Video Transcript

One of the stocks that continues to be under pressure today that actually was one of the stocks that fell, even with the gains that we saw yesterday, is Apple. Those shares are down about 4.6% after two opposing calls. Bank of America downgrading the tech giant to neutral from buy, warning of weaker consumer demand in the near term. Rosenblatt Securities taking the opposite side, upgrading the stock from neutral to buy and raising its price target to $189 from $160. Obviously, the Bank of America view winning the day here today.

Wamsi Mohan, who we’ve spoken to frequently on the show, coming out with his thesis here. He lists a number of different reasons. He says we’re going to see a weaker iPhone 14 cycle. We got some hints of that earlier in the week with the reporting that there were going to be cuts from the loftier projections from Apple. Weaker near-term services trajectory, which is quite interesting there. Stronger pro mix will not offset the decline in revenue and profit if overall revenue declines, which had been the thesis that we were hearing earlier in the week. If they sell more higher-end phones, that’ll help make up for things. He’s saying that won’t help overall.

Yeah, that kind of leans right into what I was discussing yesterday and more broadly alluding to, which is it comes back to the cycle that Apple has leaned on for years where they are able to generate demand, and in that demand generation, where they’re able to spur a new cycle because of the actual technology that is being introduced. However, I think for some of the consumers out there right now, perhaps one of the biggest tertiary winners is just going to be OtterBox because people are just going to hold onto the existing ones that they have.

You buy better defense for your phone.

Exactly. You get a better defense mechanism and make sure that you’re protecting the phone that you have. Or if you do buy a new iPhone 14 Pro Max, then you’re going to be even more conscious about making sure that you get longer life out of it. And so that lifecycle span is really going to be focused in, I think, by any of the more bearish calls that we start to see enter into the fray.

This is an aggressive call out of Bank of America, looking for a material reset in profit estimates. But I like it. I think it makes a lot of sense, all that speculation yesterday regarding the iPhone.

It could be. You never know with these things. One other thing that he mentions, of course– the stronger dollar as being a headwind to the company, which we’ve heard a lot of and we’re going to continue to hear a lot of, because it’s still going.

Absolutely. All right. We’re also watching shares of DocuSign. Citi reiterated its buy rating on the stock, saying the company’s restructuring plans is a move towards more efficiency. Yeah, interesting note out here by Citi. Of course, DocuSign, that stock has been absolutely hammered. New CEO Allan Thygesen pointed– I believe it was last week– and then came out and announced they’re cutting 9% of their 7,400 workers. So that is a big cut. But Citi saying it might be more of a reset on the cost structure over at DocuSign. But I think more important, outside of just cutting costs, this company has to start growing revenues again.

And maybe not– they’re not going to able to grow at the same rate as they were during the pandemic because we’re all signing documents at home. But still, they have to find some way to reaccelerate that growth. It’s probably going to come from overseas. They finally have to figure out how to sell correctly overseas.

Right. And that’s where that Microsoft partnership really comes into play, Microsoft and the partnerships that they’ve been able to– or portfolio clients that they’ve been able to take on around the world and recognize overseas, an area that DocuSign, to your point, is still waiting to tap into. And for DocuSign, with as much pull forward in demand that they had on new subscriptions and new clients for themselves over the course of the pandemic, people not meeting in person to sign physical documents, it then shifts towards, OK, where you’re not just only growing out that portfolio client base, but you’re also navigating where you’re not going to be able to upsell as much to even some of your partner clients who are also trimming or looking at some of their own cost structures and saying, all right, do we actually need so many PDF or DocuSign type of application licenses?

And so that is going to be one of the other major kind of headwinds that they have to navigate through, too– the number of companies that they’re trying to sell into, but they’re not going to be able to upsell at the same rate going forward.

All right. Let’s also talk–

I’m just struck by what’s going on in the markets right now.

It is wild, the number of new 52-week lows. We’ll get to that a little bit later. But we’re also watching shares of Coinbase today after Wells Fargo initiated coverage of the stock with an underweight rating, warning of several challenges ahead for the company and for its profitability here. And as we’re continuing to track the stock on the day right now, down by about 9.9%, nearly 10% on today’s activity.

One of the things that really struck me with this initiation of coverage– the underweight rating, $57 price target. They’ve got a couple of headwinds that they really lay out here. One of them– retail pricing likely going to decline over time given industry dynamics, also rising competition from others, including Binance and FDX. FDX has been heavy on the investment spree over the course of this broader early crypto winter or washout. And so it’s a larger question of, for Coinbase, how they continue to diversify the business and the other areas that they can generate revenue in this near term.

Yeah. Real good note here by Jeff Cantwell, the analyst over at Wells Fargo. He also noted this. He said, our data indicates crypto winter impacts remain significant. So I would imagine that’s his way of saying Coinbase shares don’t work against the upside unless you see crypto back over $30,000. That was my interpretation of this.

Yeah. Not in the short term, it seems like.

No, not at all.