The stock price of Apple is expected to increase after the launching of its new iPhones on September 9 event, according to analysts at BMO Capital Markets.
The Cupertino-based tech giant is expected to launch two new iPhone model with a 4.7-inch and 5.5-inch screens during the event.
In a note to investors, BMO Capital Markets analysts Keith Bachman and Jung Pak wrote that the shares of Apple Inc. (NASDAQ:AAPL) will likely increase 1% during the day of the event and approximately 8%, seven days or one week after the launch event.
The analysts explained that during the previous iPhone launches, the stock price of Apple Inc. (NASDAQ:AAPL) rose slightly during the day of the event, and modestly after several days.
Apple share to decline next week based on “sell the news”
Bachman and Pak said, “We believed that stock performance leading up to the event has an impact on the shares after the product launch.” The analyst forecasted that that the shares of Apple Inc. (NASDAQ:AAPL) will likely decline modestly next week based on “sell the news.”
According to the analysts, one of the key issues that would affect the stock performance of Apple Inc. (NASDAQ:AAPL) is whether it will announce the iWatch. Bachman and Pak believed that an iWatch announcement could help limit the near-term downside of the stock. They said, “We remain bullish on the iWatch, but we are not clear if it will be announced next week.”
Bachman and Pak are optimistic that the company will announce both the 4,7-inch and 5.5-inch iPhones, but they suggested that the availability of the devices may be different. The analysts believed that the 5.5-inch iPhone will be available at a later date, and the supply will be more limited.
Potential catalysts
Although the shares of Apple Inc. (NASDAQ:AAPL) will experience some near-term pressure, the analyst identified several catalysts for the stock. According to them, the iPhone maker will benefit from a multi-quarter upgrade cycle even if its entry in the large-screen category is already late.
Bachman and Pak believed that investors will keep their stake in the company due to the potential strong demand and limited supply for the iPhone 5.5 model. They also think that the large-screen iPhone will cannibalize the iPad mini, which will be positive for margin.
In addition, the analysts suggested that the iWatch would create growth opportunities in a new, incremental product category for Apple Inc. (NASDAQ:AAPL).
“If the iWatch is not announced next week, this may place some near-term pressure on the shares, but we nonetheless think the pending launch of the iWatch will keep investors interested in the shares,” according to the analysts.
Furthermore, Bachman and Pack suggested that any hint or comment from Apple Inc. (NASDAQ:AAPL) regarding opportunities in services such as payments could serve as a long-term catalyst for the stock.
BMO Capital Markets maintained its Outperform rating and price target of $106 per share for the shares of Apple Inc. (NASDAQ:AAPL).
