Just as major stock indexes are making a bullish move above key
levels, Apple (NASDAQGS:AAPL) has crumbled.
After hitting its $705 peak in the fall of 2012, Apple has since
fallen 35% to the $450 range. And what do Wall Street's analysts
have to say for themselves? Before we answer that question, here's
what they said about Apple:
"Wall Street Analysts Increasingly Bullish as Apple Hits Fresh
Highs." - Wall Street Journal on 8/27/12
"Apple seen as 'trillion dollar baby'" - MarketWatch on 8/21/12
"Apple could be worth a trillion in one year" - The Atlantic Wire
"Apple: $1,111 per share and a $1 trillion market cap next year." -
All Things D on 4/26/12
"Apple $1,000 Not Half-Baked" - Jim Cramer at theStreet.com
Question: Has Apple's 35% bear market decline quelled enthusiasm
for the stock on Wall Street?
Apparently, not because Factset just wrote:
"Although analysts reduced their fourth quarter EPS estimates
for Apple, they did not make significant changes to their ratings
over this time frame. In terms of target prices, analysts did lower
their estimates in aggregate by about 8%. The mean target price for
Apple is $729.84 today, compared to the mean target price of
$792.40 back on September 30.
In other words, Wall Street is just as giddy about Apple today
as it was at $700!
Apple is still the #1 ranked stock within the S&P 500 with
the highest number of buy ratings. Oddly, it's also #1 in terms of
the largest percentage of upside difference between analysts' mean
target price and its closing price.
Here's the problem: Investors who got caught up in the emotion
and bought at the peak, are getting creamed.
Apple is a major component of technology ETFs like the
PowerShares QQQ (NASDAQGM:QQQ) and S&P Technology Sector
(NYSEARCA:XLK). So far this year, technology stocks have lagged the
broader market (NYSEARCA:VTI) but are still posting a 3% YTD
When Apple shares were trading around $650, we re-analyzed the
frenzy and gave readers specific support levels, that if
broken, would spell trouble for the stock.
In a research piece titled "
Is Apple's Stock in a Bubble
" written on Oct.5, 2012 here's what we said:
"There are many examples throughout history of parabolic
moves up in price that then come crashing back down much faster
than the initial advance. The Dutch Tulip Mania in the
1600s, the Mississippi land bubble of the 1700s, Gold
(NYSEARCA:GLD) and Silver (NYSEARCA:SLV) in 1980, Japan late
80's(NYSEARCA:EWJ), and countless examples of individual stock
and commodities through the years that had astronomical price
rises only to come crashing back down eventually. Apple is
in a decade long uptrend but if price were to fall below $600
that would be a sign that the 4 year uptrend in Apple has changed
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