“Apple finds itself in familiar ground where it has to prove itself,” Priya Ganapati reports for TheStreet.com. “The Cupertino, Calif.- based company has defied expectations in the past and made a comeback like few other technology companies.”
“This time around, investors are disappointed with the company’s conservative guidance for the current quarter and fears that the iPod juggernaut is slowing and may be coming to an end,” Ganapati reports. “A bigger concern is that recessionary fears could curtail consumer spending on Apple products.”
“Two Wall Street firms have slashed their price targets on the stock since the earnings report Tuesday. Goldman Sachs reduced its price target for the stock to $175 from $220, while ThinkEquity lowered its target to $165 from $227,” Ganapati reports. “But with strong sales of Mac computers and new products waiting in the wings, Apple’s growth story may be far from over.”
“The sell-off in Apple’s stock may be overdone as the company continues to offer new products at a higher price point, analysts say,” Ganapati reports. “With Apple shares more than 35% off from their 52-week high last month, the stock may offer a buying opportunity, though investors will have to be patient. ‘It will take new product announcements or the next earnings report to get the stock moving again,’ says Romeo Dator, co-manager of the All American Equity Fund.”
“Apple shipped 2.31 million Macs, posting a 47% revenue growth from the year-before that was mostly in line with analysts’ expectations. In terms of units sold, Macs grew 44% from a year ago,” Ganapati reports. “This year, Apple could see Mac share rise to 3.8% worldwide from an estimated 3.1%, says Mike Abramsky, an analyst with RBC Capital, which makes a market in Apple shares. ‘We estimate each 0.25% share gain equates to $700 million and 11 cents in EPS,’ Abramsky told clients in a research note. ‘The uber-thin Macbook Air may also help Mac share with the added benefit of driving traffic into Apple retail stores.’ Abramsky estimates 50,000 to 100,000 Macbook Airs will be sold this quarter.”
Full article here.