“For the better part of last year, a bet on Apple stock was a sure thing. Propelled by seemingly unquenchable demand for iPods, iPhones, and Macs, Apple shares surged to a record 199.83 on Dec. 28, after starting the year at 83.80 on Jan. 3… But since the start of the new year, Apple’s stock has hit an air pocket, spiraling $75 from its high point and giving back two-thirds of the gains it made in 2007. It closed Feb. 12 at 124.86,” Arik Hesseldahl reports for BusinessWeek.
“Some analysts had hoped Apple would reverse its fortunes by releasing a new version of the iPhone. But that optimism was dashed at least for the near term, when on Feb. 5, Apple doubled the memory capacity of its existing model. For some, the move was a suggestion Apple won’t soon unveil a second-generation iPhone,” Hesseldahl reports.
“Still, some experts point to Apple’s solid gains in the market for computers, where Apple has a lot more room to grow than in the market for iPods, as cause for optimism. Munster is sticking to his price target of $250, saying it’s based on expectations that the stock will trade at about 26 times Apple’s earnings for calendar 2009,” Hesseldahl reports. “Traditionally, Apple trades at about 28 times future earnings. ‘We think Apple can earn $9.50 a share in 2009 based on strong Mac sales, the iPhone, and the revenue share from wireless carriers,’ Piper Jaffray’s Gene Munster says.”
“Other analysts aren’t quite as bullish. Shaw Wu of American Technology Research recently lowered his target from $210 to $175. Marc Kandel of Goldman Sachs pared back his target to $175, from $220. Currently the average price target is $193,” Hesseldahl reports.
Hesseldahl reports, “Apple isn’t saying much about the economy and its impact on performance. Pressed by analysts during a Jan. 22 conference call to discuss the impact of worsening consumer sentiment, CFO Peter Oppenheimer refused to take the bait. ‘We give you guidance that we have reasonable confidence in achieving,’ Oppenheimer said. ‘We’ll leave the economic forecasting to others.’ But Jobs, in his e-mail to staff, did a little forecasting of his own: ‘Investors who stay with us will be rewarded as the market’s confidence is restored over time.'”
More in the full article here.