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Apple (NASDSAQ: AAPL) Shares Momentum Fades

 May 16, 2012 01:45 PM
 


(By Fred Dunsel) Apple Inc. (NASDAQ:AAPL) closed at $566.71 last Friday, marking a flat performance for the week. The stock has yet to recover from the $600 level, which was last reached in late April. While Apple is still up 40% for the year, it has been on a downward trajectory since the start of May. Recent trends suggest that the stock may continue to consolidate over the next few trading weeks since its recent intra-day high of $618 just after its earnings announcement in April.

Nonetheless, given the upcoming launch of iPhone 5 later this year, Wall Street analysts remain very bullish about the company. In fact, recent stock performance had not resulted in any analysts cutting their stock rating or price target. Last Friday, Morgan Stanley analyst Katy Huberty wrote, in a research note, that Apple may see increased revenue growth from the addition of new iPhone carriers. RBC Capital Markets technical analyst Robert Sluymer said that Apple is "at an attractive risk/reward trading level given that it has corrected to support near 550."

The analysts' optimism is not misplaced. Apple's fundamentals are strong, while its management is constantly on the lookout for new areas of growth and innovation.With estimated shipments of 25-28 million iPhone units in the second quarter of 2012, Apple is making a serious bid for competing in the Smartphone market with current leader Samsung, which utilizes the Google Inc android platform. Meanwhile, in line with previous expectations that Apple is preparing to launch its own high-definition TV set, there were market rumors over the weekend that Apple is said to be negotiating to acquire Loewe AG, a German manufacturer and distributor of HDTV televisions, audio components and integrated entertainment systems, with a final decision expected to be announced by the end of this week. According to sources familiar with the negotiations, Apple is offering $112 million, a slight premium over Loewe AG's last closing share price (giving it a market cap of $76 million.)

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