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Apple Is Still Vulnerable, Could Test $250 in Bear Market: Schatz

Apple Is Still Vulnerable, Could Test $250 in Bear Market: Schatz

When shares of Apple (AAPL) were at $700 last September, 94% of analysts rated it a buy with an average price target of $800 a share. Seven months later and now 35% cheaper, 78% of analyst are still bullish, although FactSet data shows they've yanked their price targets down to $526, which is still about 20% above the current price.

While that is Apple's lowest buy-rating since the depths of the recession in 2009, it is still indicative of the fact that many investors think the worst is over for the world's leading consumer electronics company.

But not everyone.

"I clearly see that the secular bear market in Apple is not over," says Paul Schatz, president of Heritage Capital in the attached video. "I still see Apple with a 3-handle in front of it (e.g. a price in the $300s), and probably in the next bear market it goes to $350, $300, maybe $250," he cautions.

Before you dismiss Schatz as some kind of Apple-hating, perma-bear you should know that he was singing a similar tune in December on Breakout when he predicted Apple could fall another 50 to 70 percent. At the time of that prediction, the Cupertino tech giant had fallen about $100 or 15% from its peak of $705 three months prior.

Today, with the stock trading in the mid $400s, there's only one thing he says that's really been unexpected.

"I'm surprised at how far down Apple has come so quickly, given that the Dow is at all time highs," he says

That said, if we can get through the summer without a huge correction and "Apple is still hanging in there," as Schatz puts it, then he's looking for an intermediate term rally to $500-$550 range.

"But the key is, it has to hang in right here," he explains. If not, and it begins to go down with equities, you're probably going (to see) new lows again."

To be fair, his weak outlook is not reserved only for Apple, since he would expect "all the big stocks to go down with the market." But ultimately, he says, one thing stands out as "most troubling" to him whenever he starts to look at the stock.

"It is interesting that the bears broke the back of the bulls when the equity market was still in an uptrend," he says, labeling Apple as just another "story stock" in a bull market, and "story stocks never, never, never end well."