An analyst at Zacks expects that Apple’s share price will see a short term decline. His recommendation: wait for Apple to dip to $500 and then buy buy buy.
Zacks senior stock strategist, Kevin Cook, wrote that Apple’s stock is “headed down to at least test the May lows near $525”.
“While I am a big fan of the company, its products, and its stock, there is no reason a trip to $500 and the 200-day moving average isn't in the cards of a descending price channel,” he wrote.
To back up his prediction, Cook refers to the current economic instability: “We are still in the middle of a market correction driven by Euro-mess fears, deceleration in China, and US economic and 'fiscal cliff' worries.”
“Yes, even the strongest stock can make a trip to the wood shed when markets get ugly,” he writes.
However, Cook recognises the potential of the Apple stock, suggesting that what really drives Apple is “the earnings momentum”.
“One look tells you why this stock keeps soaring. It's no wonder it surged from $400 to $640 earlier this year as profit projections ramped up. Growth and technology fund managers have to own this stock the same way lots of consumers have to own iPhones, iPads, and Macs,” he writes.
“Apple will still grow iPhone and iPad sales that surprise, especially in Asia. And next year is going to have investors chomping at the bit to see 'Apple TV' sales projections,” he adds, suggesting that the share price won’t be on the decline for long.
Cook’s recommendation is to buy Apple as soon as the stock dips to around the $500 mark. If you are already holding Apple stock, he recommends you hang on to it.
Cook thinks Apple’s stock could head to new all-time highs above $650 in the next six months. He even hints at the potential of $750.
More details here.