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Managers back Apple share dip as a buying opportunity

by James Phillipps on Dec 04, 2012 at 11:20

Managers back Apple share dip as a buying opportunity

Apple fans are back out in force believing that with an end to its production and stock issues in sight, and the stock still some 15% off its all-time high, the tech giant is a buying opportunity.

It has been a roller coaster year for Apple both in corporate and stock market terms after the company proved itself able to power on after the death of Steve Jobs.

On the face of it all is well, with its share price up 38.97% year-to-date and the company having paid its first dividend since 1995 back in July.

But this has not been straight line growth, masking the fact the company has issued a profit warning and its share price has suffered two sharp drawdowns this year.

Media frenzy

The media frenzy back in April on the possibility of Apple’s share price hitting $1,000 seems somewhat fanciful.

Bullish notes from analysts Brian White of Topeka Capital Markets and Piper Jaffray’s Gene Muster saw both back the firm’s share price to reach four digits, with White predicting by the year-end and Muster by 2014.

This now seems a bit of a distant memory. After suffering a 16% correction during the second quarter, blamed variously on rumours of a cheaper version of the iPad being launched or just a ‘pause for breath’, Apple powered on to reach an all-time high of $702.10 on 19 September.

Roll on six weeks, and lower than expected fourth quarter iPad sales, an underwhelming iPad Mini launch and production problems at Taiwan-based supplier FoxConn led the stock to suffer its worst drawdown of the year. It fell 18.58% on a trailing price/earnings (P/E) basis and the stock hit its lowest point in a decade.

Apple has bounced back from its mid-month lows, up 8.73% from its 15 November bottom, but remains -15.42% down over three months, which Piper Jaffray’s seemingly ever-bullish Muster is calling a buying opportunity.

He points to a marked improvement in the company’s stock of iPhone 5s across different networks ahead of the key holiday season. Improving the availability of the iPhone was a crucial issue holding the firm’s share price back, he said, pointing out that iPhone sales accounted for 53% of Apple’s earnings in the fourth quarter last year.

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