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Galaxy S4 could be Samsung’s ‘iPhone 5 moment,’ analyst says

An analyst is advising investors to sell Apple stock, but also Samsung shares, as the Galaxy S4 could have a negative effect on Samsung's stock later this year, a sort of "iPhone 5 moment."
March 7, 2013
Galaxy S4

The Galaxy S4 is one of the most anticipated smartphones of the year, but could the handset have a negative effect on Samsung’s stock in the coming months? That’s what one analyst seems to believe.

Adnaan Ahmad from Berenberg Bank has not only changed his advice on Apple stock from Buy to Sell – with his price target going down to $360 from $800 for Apple shares – but he also changed his view on Samsung stock. Yes, he’s also advising Samsung shareholders to sell.

Ahmad delivered a 60-page report on the smartphone industry, and dedicated part of it to the upcoming Samsung flagship device, the Galaxy S4, which could bring an “iPhone 5 moment” to the company.

By “moment,” Ahmad refers to the moment in time Apple’s stock peaked, which was after the iPhone 5 announcement. Since then, Apple’s share price has fallen significantly even though the company sold millions of devices following the iPhone 5 launch and brought in even more revenue and profits than before.

Ahmad expects the Samsung stock to go down in the months following the Galaxy S4 release, and it will be interesting to see whether he’ll be right or wrong:

[…] learning from our Apple experience, the Galaxy S4 launch could be Samsung’s iPhone 5 “moment” – when the Apple stock peaked. The S4 should have a better processor (Exynos Octa chip) and improved display (potentially larger/flexible) but how much better can it really be? Samsung, as we have written extensively in the past, has a significant advantage over its peers as it has a 12-18 month lead on AM-OLED display technology. This technology allows for the screen to potentially be flexible and foldable. We do not think that flexible is a big differentiating factor, whereas foldable probably will be in the future. However, foldable screens are still 18 months away at least. In the interim, mega bulls on the Samsung stock are going to be hoping for a) market share gains versus Apple at the high end; and b) better margin structure than our estimates on the mid-to-low-end portfolio. • We can say with confidence that Samsung’s H1 2013 results will be robust given the S4 release and subsequent sell-in to the market. However, we think that – as with Apple – investors will quickly start to look beyond H1 2013. Hence any near-term strength in the stock for us is an opportunity to sell down positions.

On the other hand, unconfirmed reports say that Samsung may sell as many as 100 million Galaxy S4 units, with some rumors suggesting that the South Korean giant is getting ready to move 10 million units each month. What will happen to Samsung stock in such a case?

Analysts don’t always get it right, and rumors can’t always be trusted. We’ll just have to wait and see how the Galaxy S4 affects Samsung’s stock, and we’ll return to these predictions and sales estimates in the coming months.

Meanwhile, we’ll remind you once again that we’re going to cover the Galaxy S4 press event live from New York, on March 14, so keep close!