AAPL Rallies Despite Mixed Analyst Reaction to Mac Refresh [Update]

| Apple Stock Watch

Shares in Apple Inc. traded higher Tuesday after the company refreshed its Macintosh product line. Apple joined in an early-morning tech rally that saw much of the sector lifted, and then held onto those gains through the early afternoon session, despite mixed reactions from analysts.

The company refreshed much of its Mac desktop and portable product line Tuesday, lowering the price of some models, and boosting the specs on its Mac mini, iMac, Mac Pro, and MacBook Pro computers. The company also upgraded its Time Capsule backup storage device and AirPort Extreme base station.

In a research note obtained by The Mac Observer, UBS analyst Maynard Um told investors that, "Though the new Macs may provide some boost to end-of-quarter Mac units (enthusiasts and reseller channel), investors may have been hoping for greater price cuts at the low end."

Mr. Um also warned that the global economic environment could continue to, "overshadow events that have historically driven shares." To that end, he looks to the next iPhone refresh as the next major catalyst. Mr. Um is maintaining a "Neutral" rating on the company.

Many had expected Apple to hold a media event later this month, but today's announcements seem to preclude such an event.

"Having an opportunity for Tim Cook to present would have been good for him, but...investors today want to see how Apple is responding to the worst consumer-spending environment in some time," Shebly Seyrafi of Calyon Securities told Marketwatch.

Mr. Seyrafi is among those analysts who think that Apple's path to prosperity is to follow its declining competitors down the path of lower margins and competition based on price. He told Marketwatch that, "Apple needs to respond to the current economic environment with lower prices, and it does not appear to be happening."

The analyst gives Apple an "Underperform" rating.

Gene Munster of Piper Jaffray maintained a "Buy" rating on Apple, but noted, "These changes [to the Mac product line] are consistent with historical product refreshes, and we see no indication that Apple is getting more aggressive on pricing in the difficult consumer environment."

Despite such outlooks, however, Apple rallied during the trading day.

As of this writing, Apple traded at US$89.83 per share, a gain of $1.89 (+2.15%), on moderate volume. The stock has given up some of its gains from earlier in the day when it traded as high as $90.74 per share.

[Update: Apple gave up much of its gain in the waning minutes of the session, closing at $88.37 per share, up $0.43 (+0.49%), on moderate volume of 25.6 million shares trading hands.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

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Comments

Tiger

Mr. Seyrafi doesn’t get it.

I have two 7 year old G4s that will get replaced this quarter. As do a lot of people who are going to replace older hardware that will no longer be supported in the next OS upgrade. NOW is the time to buy. Just got my iPhone six weeks ago. I own 2 iPods. Apple really does offer the best solution…for me. It’s not for everybody. But then again, Apple doesn’t market itself as the solution for everybody now do they.

geoduck

Let’s be honest, these analysts were wrong about a lot of things especially Apple, for many years. Now that the whole financial world has been turned upside down, they are even less likely to understand what’s going on..

adamC

I wonder why Seyrafi didn’t mention what kind of profit margins these netbooks are getting.

Anyway talk is cheap, he should get some funds and go into the manufacturing of these low end items and see what kind of profits he can make from them.

But then what do you expect from these hacks…

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