Will Apple stock find its footing?

“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.

20 Comments

  1. “For some, the move was a suggestion Apple won’t soon unveil a second-generation iPhone…”

    And, when it does hit the shelves, there will already be a bunch more lower priced along side with all the capabilities and even some with the cachet of Steve’s famous obsession that has led us AAPL investors down down down.

  2. What all these repetitive, boring AAPL articles neglect to mention is that the market has been getting freakin’ slammed the past few months. Not to mention the recession we’re in (though the idiot economists and government officials dare not use the “R Word.”) And when the market hasn’t been getting slammed, it’s been exceptionally volatile.

    Maybe one day the economists and financial analysts will realize that AAPL does not exist in a vacuum. Maybe one day they’ll realize that $9+ trillion dollars worth of debt, huge account deficits, a housing crisis due to greedy banks and investment banks, hundreds of billions of dollars of BORROWED money being squandered in Iraq, high inflation (though the government twists the numbers in an attempt to show the opposite – whoops, no more M3 money-supply report filed by the government), factories closing, states and municipalities being broke, cities deteriorating, infrastructure collapsing, one fifth to one sixth of our population without health insurance… is simply not a healthy economic situation.

  3. Have I gone nuts, or is there an economic slowdown underway? “Perhaps” Apple stock has NOTHING to do with Apple, and EVERYTHING to do with the people who have invested in Apple. Perhaps there has been some liquidating of high Apple stock to pay for other things, and now there isn’t the longterm-minded investor ready to plop down another chunk of change for a longer stock road trip.

  4. Apple has products in the pipeline and a track record of past successes, not to mention a loyal customer base that is the envy of most companies. Regardless of market conditions, they have a lot more inherent value than companies that simply purchase technology from others (Dell) or give up on markets they helped to create (Motorola).

    No worries. Everything will soon right itself. Their will be tiered iPhone offerings just like the iPod by the end of the year. Give Apple a little time and many of the current complaints folks have will be silenced.

  5. Right now Apple has at least three big growth markets:

    1. iPhone—just starting to roll out in other countries, SDK coming online soon, and certainly more price points/models/3G by the end of the year.

    2. Mac market share is on a roll and has nowhere to go but up.

    3. Video rentals—Apple finally has all the studios on board and a very slick delivery mechanism (AppleTV) in place, as in Grandma-proof slick and it’s HD. This could really be a cash cow for Apple with very little downside.

  6. Us sharehlders have been through this before. In 2006 the shares touched $80, then went down to low $50’s. All the same arguments were presented then, second quarter guidance was off expectations, the iPod can’t continue, there is no halo effect, how can lowly Apple continue this growth, innovation has to end somewhere, blah blah blah.

    Come August we will be back near $200, then growth will go on again until the next cycle of the same blah, blah, blah.

  7. MDN, in a fit of irrational exuberance, declared that Steve had “changed the world” with this marvelous phone.

    Well, he changed mine alright – I’m having to sell the house in the worse real estate market ever and relocate under a bridge where there is no signal so the only thing I can do with the damn thing is play a little solitare until the battery dies.

  8. GM offering buyouts to 74,000 union workers who HAD good incomes. That’s a lot of people who will not be able to afford much. Same with Ford’s 54,000. Outsourcing and manufacturing products elsewhere makes for not too many consumers left in the USA. There are not enough good paying jobs around anymore. People cannot afford housing. It’s getting to be a sad situation.

  9. I know this isn’t an iPhone article, but since I’ve read some trash about the iPhone’s lack of GPS [as a negative], I just wanted to make MDN readers take note that if it ever comes up, let the trash talkers get a load of these tidbits. The iPhone uses a technology based on handset triangulation as was mandated by the FCC’s 1996 Enhanced 991 initiative. If those GPS fanboys don’t believe how accurate it can be, try dialing 911 from your cell phone and see if they don’t find you. Potential GPS drawbacks not commonly known include not working well around tall buildings (these “dark zones” reflect the GPS signal or make them inaccessible), not working well indoors, and as RIMM reports, “the constant pinging of GPS satellites runs down the batteries”.

    I’m not on MDN enough to post these facts, so thought I’d arm you daily posters with some facts relevant to the iPhones “lack” of GPS.

  10. Apple bashing has become ‘the in thing’ now, especially the hordes of PC users. I read blogs where they’re calling Steve and Apple incompetent etc.

    But even with recent 30% drop Apple stock is still blowing away Msft., last 12 months Apple grew 50.19% while Msft is down 0.2% ( i.e. Negative). It’s no consolation of course for those who bought Appl around 200 and I do think Steve and gang should do more now PRwise to shore up confidence but Appl is going to go up again.

    Financial analysts (mostly PC users in love with their blackberries. One makes iphone predictions without ever having used one) and the vast horde of PC blogs keep bashing Apple although really there is NOTHING fundamentally wrong with the company. Even Apple TV (the single low growth product of 2007) is vastly improving with movie rentals. Another example: analysts condemn Apple for low ipod sales last quarter (although it still increased 5%). Ipod revenue in contrast went up 17%. The analysts say the low ipod numbers is due to low Christmas Shuffle (stocking stuffer) sales. This is Doom? Nuts, isn’t it better to sell more profitable ipod touches (even at lower numbers) than low profit shuffles? Maybe Apple bashes want Apple to go the Microsoft route where they subsidize (from Vista sales) money losing Zunes (Zunes are not profitable) just to boost numbers. Also zooming Mac sales are mostly discounted by analysts although one mac equals the profit of many ipods. Apple is able to innovate, ipod growth slowing? change the ipod to a multi-use mobile device, compare this with Msft’s attempts to improve itself like sad Vista and it’s desperate Yahoo bid.

    The Zune is supposed to be the ipod killer (yet last quarter Msft refused to even release Zune sales numbers) and now every phone with the most rudimentary touch screen interface is going to destroy the iphone! Stick with Appl. More good stuff is coming from the guys in cupertino.

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