Blockbuster iPhone 5 Launch in China Points toward Apple Stock Being Undervalued
Investment firms are recently viewing the record breaking opening weekend for Apple’s iPhone 5 in China as a sign that the company’s shares are undervalued with strong performance likely to show up in this quarter’s financials. RBC Capital Markets recently said that Apple sold two million iPhone 5 units in China over its opening weekend as “a positive as the company continues to outpace the previous iPhone 4S launch setting up for” a positive December quarter. Firms seem to be sticking to its Outperform rating for AAPL as well as its $750 price target.
Analysts at Wells Fargo are also seeing a strong Chinese open as keeping Apple on track to either meet or beat Wells Fargo’s prior estimate of 46 million iPhones sold in the December quarter. The firm seems to see potential for some seasonal drop-off following a strong holiday quarter but Wells Fargo continues to maintain an Outperform rating with a valuation range between $710 and $730. The company’s analysis did see potential risks for Apple in the near future with slowing growth a possibility due to tough comparisons as well as the possibility of disruptions due to legal disputes and potential supply constraints. The report also draws attention to what it called “evolutionary versus revolutionary steps in innovation” as a possible cause for concern.
Many other analysts have also reacted positively to Apple’s blockbuster start for the iPhone 5 in China. The sales ended up being so strong that Apple issued a press release to tout the numbers on Sunday night. Overall, it seems like Apple will be continuing to perform as well if not better in the current quarter.