JP Morgan: Apple stock still has 'gas in the tank' despite fluctuations

Posted:
in AAPL Investors edited January 2014
J.P. Morgan analyst Mark Moskowitz told investors Tuesday that shares of Apple stock remain a strong buy with "plenty of gas in the tank" for upward movement, in spite of recent volatility.



In a note to clients early Tuesday, Moskowitz said he expects Apple to beat both his estimates and the Wall Street consensus when it reports its third quarter of fiscal 2011 results next week. He attributed the stock's recent fluctuations to the change in investor expectations as a result of "iPhone 5 vs. iPhone 4-plus soothsaying and the speculation over iPad 2 shortages."



According to the analyst, concerns of shortages are "overdone," as the firm's research indicates that "most Apple stores are fully sourced." He also pointed to the recent shift in Apple's lead times for the iPad 2 from 1-2 weeks to 3-5 days as evidence that the company's supply woes have improved.



The firm's iPhone estimate for the June quarter stands at 17.5 million units, though Moskowitz suggests there is upside potential to the prediction. The analyst sees Apple selling 6.7 million iPads in the most recent quarter, also with upside potential. Finally, he notes that his Mac estimate of 3.9 million units may also be on the low end. Apple may also post better than expected results given the improved "component cost environment," excepting Hard Disk Drives.



Moskowitz and his colleagues believe Apple will release an "iPhone 4-plus" in August or September, holding off on the so-called iPhone 5 until 2012. They also agree with recent evidence of an upcoming refresh to the MacBook Air line and suggested that the new ultra-portable Macs will see a price cut.



J.P. Morgan sees recent downtrends as bottoming out relatively soon, while noting that Apple is expected to remain a "top pick" for offsetting "low expectations and macroeconomic issues." The analyst attributes recent weakness among technology stocks to "the Japanese supply chain disruption and rising commodity cost." After a large earthquake and tsunami struck Japan earlier this year, some suppliers and component manufacturers were affected, though Apple has said the disaster did not have a meaningfully impact iPad 2 production.



"Our view is that these negative factors have partially faded, which could lead to improving global production activity," Moskowitz wrote. He believes that investors will soon regain confidence in technology stocks, which will pick back up as issues decline.



Shares of Apple fell 1.59 percent to $354.00 on Monday. The stock has bounced back from a year-to-date low of $315.32 on June 20.

Comments

  • Reply 1 of 15
    michael scripmichael scrip Posts: 1,912member
    Let's see...



    New Macbook Airs coming... and Lion...



    A new iPhone...



    Back-to-school...



    Yeah... I think Apple still has some gas in the tank!
  • Reply 2 of 15
    zoffdinozoffdino Posts: 192member
    I absolutely agree that Apple has a great line up of current and upcoming products. Plenty of gas in the tank indeed.



    But as an Apple shareholder, I have had my fair shares of disappointment lately. No matter how well Apple does, Wall Street doesn't treat it as such. Stock pries have been seriously depressed. Meanwhile, there are companies with no fundamentals trading at ridiculous PE like LinkedIn. \
  • Reply 3 of 15
    Buy around 320-330.



    Sell around 355.



    Rinse and repeat.



    I've made a tidy sum over the last few months with this approach and hope it continues for a while.



    Stock's being manipulated by the big options players.



    Us small fry (under six figures invested) should at least use it to enjoy a few thousand every month or two.
  • Reply 4 of 15
    MacProMacPro Posts: 18,293member
    Quote:
    Originally Posted by JakeBarnes View Post


    Buy around 320-330.



    Sell around 355.



    Rinse and repeat.



    I've made a tidy sum over the last few months with this approach and hope it continues for a while.



    Stock's being manipulated by the big options players.



    Us small fry (under six figures invested) should at least use it to enjoy a few thousand every month or two.



    Na, I prefer to just sit tight and wait for 600+. I got most of mine at <100.
  • Reply 5 of 15
    hal 9000hal 9000 Posts: 101member
    Quote:
    Originally Posted by digitalclips View Post


    Na, I prefer to just sit tight and wait for 600+. I got most of mine at <100.



    Exactly dude! If you got in at 100, by no means sell. Those of us that were not so lucky, just consider a few articles in Seekingalpha.com. As for 600, don´t expect that anytime soon. 400 is more realistic for December 2011.
  • Reply 6 of 15
    porchlandporchland Posts: 478member
    Wouldn't sales have to have dipped for them to "rebound"?



    I think you mean that supply is expected to improve.
  • Reply 7 of 15
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by Porchland View Post


    Wouldn't sales have to have dipped for them to "rebound"?



    I think you mean that supply is expected to improve.



    We just had a huge thread that consisted mostly of discussions about the dip in Apple's Q2 sales, or if you prefer the unsustained spike in Q1 sales (Apple's 2011Q1 runs until the end of Dec-2010).



    http://forums.appleinsider.com/showthread.php?t=127932



    Anyway, it doesn't matter whether sales drop due to supply, or demand, it's still a drop, and a subsequent rise would be a rebound.
  • Reply 8 of 15
    wizard69wizard69 Posts: 12,826member
    For one I think it is over priced and that traditional PE ratios do not apply in this economy. Second most institutional investing is not about speculation and further you don't want speculative involved in your stock.



    As an aside many net companies end up overvalued in the market. They end up with extremely high valuations and then reality sits in and people loose all sorts of money. Lots of recent evidence for this.



    Quote:
    Originally Posted by zoffdino View Post


    I absolutely agree that Apple has a great line up of current and upcoming products. Plenty of gas in the tank indeed.



    But as an Apple shareholder, I have had my fair shares of disappointment lately. No matter how well Apple does, Wall Street doesn't treat it as such. Stock pries have been seriously depressed. Meanwhile, there are companies with no fundamentals trading at ridiculous PE like LinkedIn. \



    I would say that Apple is actually trading a bit high right now. From the investors standpoint nobody knows where Apple is going and they still pull some pretty big boners from time to time. In any event I suspect that LinkeIn attracts a whole different class of investors than Apple does, not in a good way either.
  • Reply 9 of 15
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by wizard69 View Post


    I would say that Apple is actually trading a bit high right now. From the investors standpoint nobody knows where Apple is going and they still pull some pretty big boners from time to time. In any event I suspect that LinkeIn attracts a whole different class of investors than Apple does, not in a good way either.



    I agree with the last part anyway. You can't really compare an IPO with an established company.



    As for AAPL trading high currently -- how do you come to that conclusion? The only reasonable way to measure stock valuations is through PE ratios. The PE for AAPL has been declining steadily for over three years now. The ratio is trading up a bit currently (compared to a month ago) in advance of an earnings announcement, but once those earnings are released, the PE will notch lower and probably will remain lower than three months ago and certainly lower then a year ago. It's a longterm trend.
  • Reply 10 of 15
    boogabooga Posts: 1,077member
    Quote:
    Originally Posted by wizard69 View Post


    For one I think it is over priced and that traditional PE ratios do not apply in this economy. Second most institutional investing is not about speculation and further you don't want speculative involved in your stock.



    As an aside many net companies end up overvalued in the market. They end up with extremely high valuations and then reality sits in and people loose all sorts of money. Lots of recent evidence for this.







    I would say that Apple is actually trading a bit high right now. From the investors standpoint nobody knows where Apple is going and they still pull some pretty big boners from time to time. In any event I suspect that LinkeIn attracts a whole different class of investors than Apple does, not in a good way either.



    What are you basing your "expected" valuation on? P/E is a good measure, but there's also margins, price-to-sales, price-to-cash, etc. There aren't any metrics I can see that Apple doesn't demolish. The only reason its current price is as low as it is is emotion, near as I can tell. People don't "feel" it should be higher, so it isn't. The market isn't rational.
  • Reply 11 of 15
    ecphorizerecphorizer Posts: 533member
    Post deleted because I got an answer.
  • Reply 12 of 15
    tbelltbell Posts: 3,146member
    That approach has bitten me a couple of times, but unfortunately with Apple is works more times then not. You will pay more in taxes following that approach, but if it works, who cares?



    My problem isn't with Apple. The company is solid. More solid then just about anybody. However, Apple still follows the market. If the market is in trouble, which I think it is, the stock will drop. Granted it will likely rebound quickly when the market improves.



    Quote:
    Originally Posted by JakeBarnes View Post


    Buy around 320-330.



    Sell around 355.



    Rinse and repeat.



    I've made a tidy sum over the last few months with this approach and hope it continues for a while.



    Stock's being manipulated by the big options players.



    Us small fry (under six figures invested) should at least use it to enjoy a few thousand every month or two.



  • Reply 13 of 15
    tbelltbell Posts: 3,146member
    As did I, but Apple's stock is manipulated quite a bit. I think it will be a bumpy ride to 600.



    Quote:
    Originally Posted by digitalclips View Post


    Na, I prefer to just sit tight and wait for 600+. I got most of mine at <100.



  • Reply 14 of 15
    brucepbrucep Posts: 2,823member
    Quote:
    Originally Posted by Hal 9000 View Post


    Exactly dude! If you got in at 100, by no means sell. Those of us that were not so lucky, just consider a few articles in Seekingalpha.com. As for 600, don´t expect that anytime soon. 400 is more realistic for December 2011.



    buying and selling at %5 movement is asine and you will lose bad .



    apple should be way past 440 a share so if it climbs up to

    360 JUST BEFORE reports or new product then if you HAD bought at 330 then of course sell at %9 0r % 10 percent





    oddly apple has great news every quarter and still the stock sits in a glue jam .



    so one day soon i think apple will jump by 50 points in 3 days and then do a slow climb past 500 . so for me i won't sell no matter what .





    APPLE IS THAT GREAT







    9
  • Reply 15 of 15
    freerangefreerange Posts: 1,589member
    Quote:
    Originally Posted by wizard69 View Post


    For one I think it is over priced and that traditional PE ratios do not apply in this economy. Second most institutional investing is not about speculation and further you don't want speculative involved in your stock.



    As an aside many net companies end up overvalued in the market. They end up with extremely high valuations and then reality sits in and people loose all sorts of money. Lots of recent evidence for this.







    I would say that Apple is actually trading a bit high right now. From the investors standpoint nobody knows where Apple is going and they still pull some pretty big boners from time to time. In any event I suspect that LinkeIn attracts a whole different class of investors than Apple does, not in a good way either.



    What planet are you living on? "over priced"? "Big boners"? Name one... And don't even try the whole BS "antennagate" nonsense which turned out to be one big nonissue. They continue to fire on all cylinders with the only real problems being production constraints keeping full potential down, yet they still hit the cover off the ball.
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