Goldman Seeing Froth of Secondary Apple (AAPL) 'Fear Trade'
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Price: $166.78 +0.57%
Rating Summary:
39 Buy, 25 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
Rating Summary:
39 Buy, 25 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
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This week it was reported that Sharp is slated to begin production of iPhone 5s displays in June. This supports views that Apple (Nasdaq: AAPL) will launch the iPhone 5s this fall. Success of Apple's iPhone 5s and its rumored lower-cost iPhone is critical to ending negative sentiment, thinks analyst Bill Shope of Goldman Sachs.
Interestingly, with the recent rally in shares of Apple, Goldman noted that many investors were already worried they were "missing something."
"We're now seeing the beginnings of 'the fear trade' on Apple . . .Our conversations with investors this week suggest that many are starting to worry they may be underexposed to a continued near-term rally in the name. This dynamic is interesting in that it's the reverse of the process we saw in late 2012, where investors were trimming as the stock continued to sell off aggressively," said Shope.
Shope ties the recent rally in Apple to its new capital allocation plan and reset in expectations.
"On that front, however, we were surprised to see that the April 30th short interest data (released May 9th) shows that Apple’s short interest increased by 107.2% over a 2 week period," puzzled the analyst.
"While we still believe the company needs to have a hit product cycle to drive a meaningful share price recovery this year, the shorter-term downside risk certainly appears to be less severe than many had previously feared," he concluded.
Shope rates shares of Apple a Buy with a $500 price target.
For an analyst ratings summary and ratings history on Apple (NASDAQ: AAPL) click here. For more ratings news on Apple click here.
Interestingly, with the recent rally in shares of Apple, Goldman noted that many investors were already worried they were "missing something."
"We're now seeing the beginnings of 'the fear trade' on Apple . . .Our conversations with investors this week suggest that many are starting to worry they may be underexposed to a continued near-term rally in the name. This dynamic is interesting in that it's the reverse of the process we saw in late 2012, where investors were trimming as the stock continued to sell off aggressively," said Shope.
Shope ties the recent rally in Apple to its new capital allocation plan and reset in expectations.
"On that front, however, we were surprised to see that the April 30th short interest data (released May 9th) shows that Apple’s short interest increased by 107.2% over a 2 week period," puzzled the analyst.
"While we still believe the company needs to have a hit product cycle to drive a meaningful share price recovery this year, the shorter-term downside risk certainly appears to be less severe than many had previously feared," he concluded.
Shope rates shares of Apple a Buy with a $500 price target.
For an analyst ratings summary and ratings history on Apple (NASDAQ: AAPL) click here. For more ratings news on Apple click here.
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