Apple Inc. (NASDAQ:AAPL)’s stock closed up 2.18 percent to $541.39 on Tuesday and for the year-to-date, it’s up 33.68%.
With a 52-week high of $705.07, it’s won the hearts of bulls. For months, analysts have been bullish on Apple stock, some going in on the $1,100 range, while others are in the $900 camp. This has come even when the company’s stock had its worst trading day in four years.
Many value investors have given up on their strategy over the last 15 years amid concerns that value investing no longer worked. However, some made small adjustments to their strategy but remained value investors to the core. Now all of the value investors who held fast to their investment philosophy are being rewarded as value Read More
Meet Piper Jaffray analyst Gene Munster.
On Dec. 5 in a CNBC interview, Munster confidently stuck to his $900 price target. He said it was about Apple Inc. (NASDAQ:AAPL)’s strong fundamentals and the fact consumers buy the company’s products that led him to remain bullish.
Munster explained via CNBC, “I’m a fundamental analyst and did a lot of calls with investors today, and I feel like I got a master’s in technical analysis just based on an earful from investors, and that’s a big issue.”
He commented that with investors’ concerns combined, it could drive Apple’s price down to $500. But one thing that will keep Apple Inc. (NASDAQ:AAPL) going is its strong product demand.
He added, “The demand for iPhone, the demand for Apple products continues to be exceptionally high. People want their products and we think that that ultimately going to drive the stock higher.”
Should Apple Inc. (NASDAQ:APPL)’s price dip, investors need to look at a longer picture. Think about Apple in years, not quarters.
He said, “You’ve got to look at it in context of the year, not the September quarter, in which nobody was buying an iPhone.” Apple consumers jumped to the sidelines for buying products in the September quarter as they waited for the iPhone 5 launch.
Munster has been all over the place this year with price targets for Apple Inc. (NASDAQ:AAPL). Earlier this year, he predicted a $1,001 per share within 12 months and then in April, he wrote, “Shares can reach $1,000 based on our belief Apple will continue to win in global mobile devices.”
In the short-term, Munster also had $910 target price for the stock.
But to put Munster’s CNBC interview in context, he made his remarks on the day that Apple’s stock fell 6.43 percent. The company lost $34.9 billion in market cap at $583 per share; it was the company’s worst trading day in four years and an almost 24 percent fall from the company’s all-time high at $705.07 earlier this fall, and is now at approximately $540 a share.
Apple Shares Tank on Dec. 5
So what happened last Wednesday? There’s been a lot of speculation from analysts and experts about what transpired. This included the misinterpretation of reports, predictions for a market share fall, the China Mobile and Nokia deal with Nokia and yes that looming fiscal cliff.
There were some predictions that Apple could see a decline in tablet market share to its Google’s Android and Microsoft’s Windows Phone competitors by 2016.
Munster added his two cents to Apple’s decline.
One was the misinterpretation by investors of the Chinese technology site DigiTimes article that suggested iPhone demand will be low early next year.
Munster wrote in a Dec. 5 research note, “A DigiTimes article from today suggests that iPhone 5 is selling well based on comments from wireless chipset providers and seems to suggest upside to the Street’s 43-45 million estimate for December. In the same article, DigiTimes is suggesting a 20% q/q decline in Apple’s demand for parts and components in March. We believe this 20% decline is to be expected coming off of a launch quarter and do not believe it is an indication of how units might trend in March.”
He also shot down rumors about about China Mobile Ltd. (NYSE:CHL) (HKG:0941) carrying Nokias Lumia phone as opposed to the iPhone. Munster wrote in the same research note that the carrier will have the phones in the second half of 2013.
With Munster sticking to his $900 target, what’s next for Apple in the near-term for a price rise?
After a day like Dec. 5, the Apple Bears stared coming out.
Brian Battle, director of trading at Performance Trust Capital Partners said to Reuters, “This is not going to be a short-term trend. This is a management test, of how well they can perform without Steve Jobs.”
Referencing Apple’s new iPad mini, which is really just a mini iPad, Battle added the company needs “another home run” for shares to bounce back around the $700 level. He commented, “They need another new product that hits it out of the park. Without that, they could get a gradual grind-down in confidence.”
Apple announced last week that it will launch the iPhone 5 in 50 more countries this month such as China and South Korea; with that addition, the country count will hit the century mark for the smartphone.
Will that be enough to give Apple Inc. (NASDAQ:AAPL) a bounce? No. Maybe they should have thought about a special dividend similar to other companies in anticipation of the fiscal cliff.
Whatever happened to that AppleTV?