Apple shares have fallen nearly 30 per cent after hitting a record high in September, in part on worries that its mobile devices are no longer as popular as they were. As competition intensifies from Samsung and others using Google's Android software, investors are wondering if Apple's days of hyper growth are over.
There are still plenty of Apple bulls on Wall Street. Forty-eight out of 58 equity analysts who cover the stock rate it a "buy" or "strong buy" and another seven say it is a "hold," according to Thomson Reuters data. Only three recommend that investors sell the stock.
We still expect iPhone growth.
The median price target is $745, which is roughly 50 percent above Apple's Friday close of $500.
The company is expected to continue to post double-digit revenue growth into at least 2015 and a StarMine analysis of its expected growth over the next decade puts the stock's intrinsic value at about $708 a share.
"We still expect iPhone growth. They are still pointing to a strong December quarter and, if you think there's any momentum left, that they can grow on the high end (of the smart phone market) or find growth in other sectors, this is a buying opportunity," said Morningstar analyst Brian Colello, who has a fair value call on Apple at $770.
Investors also expect Apple to follow through on a promised $10 billion stock buy-back program.
"If the company is not buying back at this level, I think it's absurd and suggests that something is seriously wrong with the company," said Mark Mulholland, manager of the Matthew 25 fund, which has about 17 percent of its holdings in Apple.
Last year, the fund posted a considerable 29 per cent gain, although it lost 2.8 per cent in the last quarter as Apple slumped. (Apple shares gained 31 percent over 2012)
Mulholland values Apple at more than $1,000 per share, based on its growth prospects and cash level. Apple had cash and securities of $121.25 billion at the end of September, or about $129 per share.
Still, he agrees with technical analysts who say there is little momentum behind the stock. Some point to support near $425 per share, which means there is room for the stock to fall another 15 percent from current levels.
"Three things influence a stock price: growth, value and momentum. The growth and value are there, but you've completely lost your momentum," said Mulholland.
