Apple Inc. (NASDAQ:AAPL) stocks breached the $500 mark on Wednesday for the first time in almost eight months. Also, if historical performance is anything to go by, the stock of the iPhone maker will continue the rising trend backed by the expected launch of new iPhone next month, says a report from The Wall Street Journal.
In the last three sessions, Apple Inc. (NASDAQ:AAPL) shares partially gained from investments by Carl Icahn, rising more than 10 percent. Despite the recent run, the report notes that shares are still well below the level they traded at during the launch of the previous iPhone, raising doubts over the outlook of the high-end smartphone segment, along with questioning Apple Inc. (NASDAQ:AAPL)’s ability in maintaining its edge over the competitors.
A month before the launch of the previous four versions of iPhone (excluding the iPhone 5), Apple Inc. (NASDAQ:AAPL) shares on average gained 4 percent. In the case of iPhone 5, for the same period, shares were up 6 percent, and gained another 6 percent to cross the $700 mark, just two weeks after the device was available for sale. Since then, shares of the Cupertino-based firm have been sliding consistently and were trading below $400 recently.
Management showing confidence in stock
Apple Inc. (NASDAQ:AAPL) is expected to host an event on September 10 and is rumored to unveil the much awaited iPhone 5S and other models designed for emerging markets. Also, to boost investors’ confidence, Apple is repurchasing a significant amount of stocks authorized under the $60 billion buyback program announced in April. Along with the company, Carl Icahn is also looking confident on the company’s future prospect.
According to data from FactSet, Apple Inc. (NASDAQ:AAPL)’s shares are trading around the 12 times the earnings estimate against 10 times forward earnings in late January, which is primarily due to the lower earnings estimate from the Wall Street. A lower estimate increases the PE if the stock price is same. Also, Apple Inc. (NASDAQ:AAPL)’s value is higher than the last time when the stock traded at $500.
The confidence shown by management, if backed by big selloffs of the new model, will surely result in unprecedented success for the company.
