Apple’s Stock Outperforms Prior To iPhone 5S Launch

Apple’s Stock Outperforms Prior To iPhone 5S Launch

Shares of Apple Inc. (NASDAQ:AAPL) outperformed prior to the launching of its new products: the iPhone 5S, iPhone 5C, and new iPad devices, according to analysts at Bernstein Research.

Play Quizzes 4

apple stock

Apple stocks outperform

Bernstein analysts Toni Sacconaghi, Jr., Jonathan Cofsky, and Eric Garfunkel noted that the stock of Apple Inc. (NASDAQ:AAPL) historically outperformed two months and one month before the announcement of its new products by 970 bp and 450 bp, respectively.

Morningstar Investment Conference: Fund Manager Highlights Personalized Medicine, Energy Security

Clint Carlson Far ViewHedge fund managers go about finding investment ideas in a variety of different ways. Some target stocks with low multiples, while others look for growth names, and still others combine growth and value when looking for ideas. Some active fund managers use themes to look for ideas, and Owen Fitzpatrick of Aristotle Atlantic Partners is Read More

According to Sacconaghi and his fellow analysts, shares of the iPhone and iPad maker already “eclipsed the historical average outperformance in advance of the iPhone 5S announcement.”

The analysts observed that Apple Inc. (NASDAQ:AAPL) already traded strongly, and significantly exceeded its average level at 1730 bp on a two month basis compared with an average of 970 bp.  Its 1130 bp on a monthly basis outperformed the 450 bp average.

Sacconaghi and his fellow analysts emphasized that the shares’ outperformance was relatively tepid historically during the two week period surrounding its product launch date, and the stock underperformed within the two months period after its major product announcement.

Icahn triggered the recent stock rise

The analysts said that the recent upward movement of the stock (_700 bp) was driven in part by  Carl Icahn’s announcement regarding his large stake in Apple Inc. (NASDAQ:AAPL). According to them, the company still underperformed by ~2,300 bp year-to date.

In addition, Sacconaghi and his fellow analysts stressed that Apple’s valuation remains very attractive based on its history, tech space, and overall market. Furthermore, the analysts expect the company to roll out its new products this fall, and a deal with China Mobile Ltd (ADR) (NYSE:CHL) is becoming increasingly possible.

Moreover, the analysts believe that a potential downward EPS revision is low. According to them, the current EPS estimates for Apple Inc. (NASDAQ:AAPL) for the fourth quarter and fiscal 2014 are at a reasonable level given the fact that the EPS estimate for fiscal 2013 already dropped by ~25% .

Apple’s share buyback

Furthermore, the analysts also noted that several prominent investors continue to demand a higher cash return. Apple Inc. (NASDAQ:AAPL) approved a $60 billion shares buyback.

Sacconaghi and his fellow analysts recommended an Outperform rating for shares of Apple Inc. (NASDAQ:AAPL) with a price target of $600.

Updated on

Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.
Previous article U.K. Officials Join U.S. In JPMorgan London Whale Probe
Next article Hedge Funds Bleed In Herbalife, Radian; Succeed In Fusion-io, Equinix Shorts

No posts to display