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Apple Shares Gain as Stock Seen Undervalued: San Francisco Mover

Nov. 19 (Bloomberg) -- Apple Inc. advanced the most in almost seven months as analysts said a two-month stock slide is unjustified given brisk demand for the iPhone and iPad.

Shares of Cupertino, California-based Apple advanced 5.8 percent to $558.45 at 12:20 p.m. in New York, and earlier touched $559.37 for the largest gain since April.

Apple, which overhauled most of its entire product line-up ahead of the holiday shopping season, had lost about one fourth of its stock market value through Nov. 16, since hitting a record of $702.10 on Sept. 19. Despite investor concerns about product shortages, stiffening smartphone and tablet competition and management changes, demand for its products remains strong and the stock slide is unfounded, Brian White, an analyst at Topeka Capital Markets, wrote in a research report today.

“The sell-off in Apple’s stock over the past eight weeks has gotten to the point of being ‘insanely insane’ given the depressed valuation, new blockbuster products for the holiday season, the attractive long-term growth opportunities that lie ahead and the company’s ability to distribute significant cash flow to investors,” White said. He recommends buying the shares and has a 12-month price estimate of $1,111.

Katy Huberty, an analyst at Morgan Stanley, also said today that Apple’s shares are a “discount” because of the recent drop. Sales of the iPhone 5 and iPad mini are providing a current boost, while sales in China and other emerging markets such as Brazil will sustain the company’s growth longer term, she said.

Huberty said recent meetings with Apple’s suppliers in Asia point to better-than-expected iPhone and iPad sales. Analysts are predicting 46 million iPhones and 23 million iPads to be sold during the quarter that ends in December, she said. China Mobile Ltd., that country’s largest mobile-phone carrier, also may add the iPhone by the second half of 2013, Huberty said.

Of 62 analysts surveyed by Bloomberg, only two recommend selling the shares. The average 12-month target price is $766.60.

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