A Barclays Capital analyst named Ben Reitzes has discovered an interesting trend in Apple Inc. (NASDAQ:AAPL) stock. Apple Inc. (NASDAQ:AAPL) stock has been volatile in recent times as investors wonder how long the company can keep up its blistering run. Those worries caused Apple Inc. (NASDAQ:AAPL) to lose 25 point in a single day last week though the company managed to make up the loss in a single day. Reitzes has tried to allay fears today putting a target of $730 on the share and addressing investor fears surrounding the stock.
The analyst said that in the six months leading up to the release of new iPhone models the company’s stock rises by 31% on average. He said that the next iteration of the smartphone was particularly special and should be a boon to the company’s price. A report from research firm BITG last week caused havoc when it called for a lower price target for Apple on the grounds that the company’s deals with carriers to subsidize the iPhone could not last.
At the end of last week, Bruce Greenwald, the founding director of the Heilbrunn Center for Graham and Dodd Investing at Columbia Business School, sat down for a Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital as part of the 13th Columbia China Business Conference. The chat spanned many different topics, Read More
According to that report quicker upgrade cycles in the smart phone region would cause Apple’s revenue in the third quarter to come in at $1 billion below estimate. The Barclays report countered this assessment suggesting that the revenue per user from iPhone users was high enough to justify the cost of subsidizing the handsets. Verizon, one of the biggest sellers of iPhones in the United States, announced its earnings this morning. They came in slightly higher than analysts has expected at $0.59 per share and revenue was up. That increase demonstrates that there is not a crisis in the market yet though that doesn’t rule out the possibility of one in the future.
Reitzes also ruled out the possibility of iPhone sales this quarter being drastically lower than expected and the low number of Mac sales. He said none of these were problems for Apple in the near term. The problems addressed by the report point to the main problem with Apple stock. The company is the world’s most valuable by Market Cap, and has been for some time while still racing ahead in price. The market cap is bigger than several European countries and investors are stalling, wondering when far ahead of rivals is too far ahead by rivals. There are also alot of positive growth expectation built into the firm’s stock, if there is a sign of weakness the expectation bubble will collapse quickly as investors desert the stock.
Apple opens at 603.4 this morning. the firm was down 0.81% in pre-market trading.