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Tuesday, October 9, 2012

Apple Inc. (NASDAQ:AAPL) Had Volatile Session, But Off Session Low, What To Do Now?


Apple Inc.(NASDAQ:AAPL) shares are have started attracting more sellers than buyers in the recent weeks as the stock has retreated about 10% from its all time high of $705.07 on Sep 21, 2012 as investors have digested the company’s latest launch of iPhone5.

However, AAPL’s shares bounced back smartly from intra day’s low of $623.55 and now down by just 0.40% to $635.68. Out of the past 12 trading sessions, the stock has managed to ended lower in the past eight trading sessions since September 21, the day when it had announced its first weekend sales for iPhone5.

Considering the recent fall in the stock, Shaw Wu, an analyst at Sterne Agee, remains optimistic on the stock stating that the recent fall of 10% is just a follow up correction after a big run-up. Demand for the iPhone 5 remains strong, and supplies of needed parts are improving. The production bottleneck now lies in assembling the phones, he said.

However, on the other hand, Analyst Stuart Jeffrey at Nomura Securities turned bit pessimistic from the long-term view. After 2014, Apple's earnings growth rate will go from today's heady rate of more than 50 percent per year to less than 10 percent, Jeffrey predicted.

He stated that by then, almost everyone who can afford one in the developed world will have a smartphone. In developing countries, there will still be some growth, but competition on price will make the iPhone less profitable for Apple, he wrote.

The firm has a neutral rating on the stock, while the price target is $710, about 4% lower from the CMP.
Analysts expect Apple's next product launch to be a smaller version of the iPad, to be announced within a month.

Now, the next trigger for the stock would be its upcoming earnings on Oct. 25 for the fiscal fourth quarter.
However, even if we consider the latest slid, Apple is still the most valuable company in the world with about $600 billion in market cap.

1 comment:

  1. Until users become more enlightened, and/or less concerned with image, Apple will continue to be successful. Their products have trailed the competition for at least 2 years (more in the computer segment) in performance, security, usability, features.
    Yet, they still sell in droves because they look pretty and users want to be cool (not necessarily bad traits, but the exorbitant prices Apple charges for these privileges should have long-negated them, considering the inferiority of their products)

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