The Ascent of Apple Stock Price Slows

Apple (AAPL) shares closed Thursday at $333.73, very near an all-time high. Some analysts have price targets on the stock above $450. If Apple shares reached that level, the tech giant would likely pass Exxon Mobil (XOM) as the most valuable U.S.-listed company.

What analysts do not talk about is that Apple's stock price growth has slowed substantially, especially relative to the Nasdaq. Apple rose 60% in the last year, while the Nasdaq was only up 20%. However, in the last three months Apple rose 15% while the Nasdaq was up 14%. In the last month, while Apple has risen by 5% the Nasdaq has climbed over 4%. The reality is that Apple has not risen toward optimistic targets as quickly as many analysts expected.

There are a few reasons for the slowing. The first is a skepticism about Apple's next quarterly financial report. Thomson Reuters shows that the high-end estimate for EPS among analysts who follow the company is $5.75. The low estimate is $4.93. Apple typically outperforms its forecasts, but at least some experts do not think that will happen for the quarter just past.

Apple is also facing fierce competition from Google's (GOOG) Android operating system. More and more smart phones from manufacturers like HTC and Motorola (MOT) use the Google OS. The iPhone may face the first real challenge to its rapidly growing units sales. There is some concern about the iPad's market share as well. A large number of consumer electronics companies have released tablet PCs. While no single one of them may take a great deal of market share in the sector, as a group, that may not be true.

The last reason that Apple's stock price may have stopped its meteoric rise is that it does not appear that the company will release a major new product soon. There could be an upgrade of the iPad on the way, and Apple has just opened a Mac app store. But none of these things is likely to have the impact that the introductions of the iPhone and iPad did.

Apple, for the first time in a long time, may have hit a bump in the road.

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The hedge funds must be making sure this stock doesn't move at all. Take one look at Amazon and it's practically sitting on projected target prices. With Apple, I think its nearly touched some of the lowest target prices and is well behind the median target price of $375. I'm sure everyone knows that Apple will have a huge holiday quarter and it's being upgraded on a weekly basis and still this stock just creeps up a few dollars a week. It's good that at least it does that much. Either investors have no interest in this stock or the hedge funds are stopping any major movement. Hopefully, on earnings announcement, the stock will suddenly slingshot, but that's probably my wishful thinking. Its just hard to understand that a company that can keep its stores packed while other retailers are losing money isn't given any respect by investors. Is $330 really too much for individual investors, yet they'll continue to buy Google at around $600. That's puzzling. They must consider Apple too much of a risk to gamble with their money.

January 07 2011 at 10:54 AM Report abuse rate up rate down Reply