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‘Apple Fever’ Hasn’t Broken: “There’s Lots to Look Forward To,” Analyst Says

Aaron Task
Editor in Chief
Daily Ticker

Major averages rose Friday, making the decline in Apple stock that much more notable - and painful for Apple shareholders.

It's been a tough couple of weeks for Apple stock: After hitting an all-time high of $644 on April 10, the stock has fallen 11% and was recently trading around $573.

The backup in Apple stock only raises the stakes for its fiscal second-quarter earnings, due after the bell on Tuesday. In the accompanying video, I preview the quarter with Brian White, senior analyst at Topeka Capital Markets, and Adam Lashinsky, author of Inside Apple and senior editor-at-large at Fortune.

White and Lashinsky each seem to think there's not a whole lot for Apple bulls to be worried about.

At earnings per share of $10.06 and revenue of $37 billion, White is above consensus estimates, which is for EPS of $9.99 per share on revenue of $36.6 billion.

"Our numbers are very achievable, there's upside to the numbers," White says. "Apple fever has a lot more ways to go."

Notably, consensus estimates have risen in the past week, even as the stock has fallen. That suggests the recent decline in Apple shares "has nothing to do with anything, most importantly not next week's earnings," as Lashinsky declares.

Considering Apple shares surged from under $400 in September to above $640 in mid-April, there really isn't a whole lot for shareholders to gripe about, despite the recent weakness. But "price dictates news," as the saying goes, and a lot of folks have tried to figure out why the stock has declined from its peak.

Commonly cited catalysts include:

  • A BTIG report about Mac sales being disappointing.
  • Speculation by Apple bull Gene Munster of Piper Jaffray that the iPhone 5 may be delayed until October after Qualcomm said it was having trouble meeting supply demands.
  • Verizon's report that iPhone 4S sales fell to 3.2 million in the first quarter from 4.3 million in the fourth and related user frustration with Siri.
  • The Justice Department suit over e-book pricing.
  • Rumors Apple will release a mini version of the iPad.

Again, neither White nor Lashinsky seemed particularly concerned about any single issue.

"On balance I remain very bullish about the company," Lashinksy says, arguing that Apple's multiple business lines provide a "cushion" if there's a disappointment in any one segment.

White, meanwhile, is unfettered in his enthusiasm, citing Apple's still relatively low market share in the PC and smartphone markets, opportunities in China and the expected release of Apple TV later this year.

"I think there's lots to look forward to," the analyst says. "We talk about Apple fever rising to $1 trillion market cap. I think that's something we'll look back in 3 to 5 years and laugh about when it's a multi-trillion-dollar company."

What do you think? Are the bulls right or has the 'law of large numbers' (and gravity) finally caught up to Apple?

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com