On June 25, tech giant Apple Inc. (AAPL) was at $402.54, far below its September 2012 peak of $705. It had lingered near $400 for awhile, having previously hit a 52-week low of $385.10 on April 19. Analysts were generally bearish on the stock, and it looked like the company had finally reached total saturation.
But starting in early July, the stock started to creep up, slowly. On July 23, the company released their third fiscal quarter earnings report, which was largely positive. It indicated that despite fears that sales would slip, iPhone sales actually beat expectations by more than 5 million units. The stock shot up, and has continued on that trajectory ever since, gaining nearly 20 percent in value. Billionaire Carl Icahn has taken notice, tweeting that he has taken a “large” position in the company, and feels the stock is "extremely undervalued."
Bolstering his new-found reputation as an activist investor with shareholder’s best interests at heart, Icahn said he pressured Apple CEO Tim Cook to increase share buybacks for existing shareholders. This, of course, will also increase the value of his already large position, but it will also insulate the stock's price from another panicked firesale.
Despite the sell-off that occurred during Apple’s 2013 low point, the fundamentals of the company have always remained strong. While they lost market share to Samsung, and are no longer the largest smartphone maker in the country, they still hold an impressive 39.2 percent of the American market.
By traditional metrics, the company is sound. Apple currently sports a P/E ratio of 11.67, and holds a forward P/E of 11.04. This is of comfort to analysts, who now put the consensus price target for Apple at $530 a share.
As reported by Reuters, rumors have begun circulating that Apple will debut the newest iteration of the iPhone at a special event on Sept. 10. This would give them plenty of time to entrench before the crucial holiday season.
Not all analysts are convinced Apple will turn things around so drastically, however. Of 45 analysts from major firms reporting on Apple, 20 hold a price target of $505 or below. And even the more vocal bulls, like Charles Wolf of Needham & Co. have pulled back a bit. In a detailed, 4,380 word memo on the company Wolf released on Aug. 12, he explained the “hostile competitive environment” for smart phone makers had caused him to lower his price target for the tech giant from $700 to $595.
Apple is up 4.75 percent to hit $489.57 a share.
(Image: Apple Headquarters in Cupertino, Cal. courtesy of Wikimedia Commons)
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