Apple Drops Another 3.6%, Analyst Calls Sell-Off “Overdone”

| Apple Stock Watch

AppleShares of Apple Inc. have officially slipped into bear territory after the stock slid another 3.63 percent on Thursday. $AAPL ended the day at US$537.75 per share, $20.252 (-3.63 percent). Worries about Foxconn's ability to make enough iPhone 5s continued to concern investors, while one analyst called AAPL's recent sell-off overdone.

AAPL has fallen $164.35 since its all-time closing high of $702.10 set on September 19th, less than six weeks ago. That's a decline of 23.4 percent, the largest correction for Apple's stock in many years, and a result that means AAPL is officially in bear territory.

Analysts have largely remained upbeat, however, and Wall Street's AAPL consensus price target is currently $770, a target that is 43.2 percent above Thursday's closing price.

On Thursday morning, we reported that Sterne Agee analyst Shaw Wu told his clients that, "Recent press reports quote Hon Hai Chairman Terry Gou commenting that the company is having a hard time keeping up with robust demand as the iPhone 5 isn't easy to build due to Apple's high quality standards."

He added, "This is consistent with our previous comments that the supply chain bottleneck has moved from components to the assembly itself. However, we continue to pick up much improved capacity in our supply chain work and remain comfortable with our 46.5 million total iPhones for the December quarter."

Oppenheimer & Co. analyst Ittai Kidron issued his own upbeat comments, calling AAPL's sell-off "overdone. He didn't completely dismiss worries about Foxconn, but did say, “Not ignoring these challenges, we still believe the shares are overextended to the downside and embed too much pessimism regarding headwinds and execution."

Looking at the big picture, he said, "We believe Apple's competitive position is unchanged and see it better positioned with a refreshed portfolio across all key segments heading into 2013. We see good potential for a rebound as iPhone/iPad demand holds up."

AAPL remains $132.75 above its 2011 close of $405, a gain of 32.8 percent, but that's well off from the 73.4 percent gain on September 19th. While 33 percent is impressive, AAPL is no longer the top tech gainer in the S&P 500, as noted by Dan Gallagher for Marketwatch. That's a position that Apple has occupied for some time.

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

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For seemingly intelligent, educated people, the folks that work on Wall Street behave like hoofed animals. There’s a herd mentality that’s astounding. If some are selling we all must sell or we’ll get burned. Of some are buying we all must buy or we’ll miss out. I’ve often wondered if you could use the equations for fluid flow to predict what the markets will do. Somebody thinks Apple does well so the market acts like a wave running up the shore. Somebody thinks Apple is doing poorly and the market behaves like somebody pulled the cork out of the bottom of a barrel. It’s silly and fundamentally irrational.

That’s why I never went in for day trading or any of that BS. Sure I could have bought APPL at $12 in the ‘90s and would be rich today, but I could have just as logically put my money into Gateway Computer. Let me show you some stock certificates from “The Bruneau Gold Company” that my family got in the ‘30s and still holds. Never heard of them? You never will either.

I just don’t trust the market, and the stupidity I’ve witnessed over the decades has shown that to be a wise stand to take.

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