Selling in Apple (AAPL) Shares WAY Overdone, Buy Ahead of China Mobile (CHL) Deal - BofA

December 18, 2012 7:58 AM EST
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Price: $119.04 --0%

Rating Summary:
    60 Buy, 10 Hold, 5 Sell

Rating Trend: Up Up

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    Up: 0 | Down: 0 | New: 0
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Apple, Inc. (Nasdaq: AAPL) shares are ticking higher Tuesday morning as Bank of America/Merrill Lynch (BAML) is getting bullish on the stock.

BAML said the recent selloff in Apple shares is overdone. Looking at valuation, it appears that the market is pricing in a 14 million drop in iPhone sales in fiscal 2012 to the 170 million to 175 million range. The recent price action also hints that investors believe Apple will lose about 3 points of global smartphone market share to 15 percent in fiscal 2013, from 16 percent in fiscal 2011 and an estimated 18 percent in fiscal 2012.

Looking to fiscal 2013, BAML thinks Apple will ease to about 16 percent smartphone market share. That number will get back to the 17 percent to 18 percent range in fiscal 2014 as Apple secures a contract with China Mobile (NYSE: CHL).

In fact, BAML says China Mobile would add about 25 million to iPhone unit sales in fiscal 2014, bolstering revs by over $15 billion and improving earnings by $5.50 per share.

Recent chatter over production cuts are mostly from upstream suppliers, the companies that make in-cell panels for the iPhone 5, BAML says.

BAML last rated Apple at Buy.

Ahead of the bell, Apple is up 1.3 percent.

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