It seems Apple is a company that just cannot put a foot wrong at the moment. Its Mac product lineup continues to gain popularity, its iPad is blowing rival Android tablets out of the water, and its new iPhone 4S — which apparently no one was interested in because it looks just like its predecessor — sold a staggering 4 million units during its launch weekend alone. It’s no surprise, then, that the company’s share price hit an all-time high of $422 on Friday.
Despite its consistent success, however, one analyst believes Apple’s share price could be about to fall. The company is expected to announce its third-quarter revenues tomorrow, and Colin Gillis, an analyst with BGC Financial, has downgraded Apple stock from ‘buy’ to ‘hold’.
Why? Well, following a 31% increase in the company’s stock price during 2011, Gillis says “the company has to consistently set records just to meet expectations,” and that investors may be disappointed with tomorrow’s announcements.
Sales of the iPhone during the third-quarter will reflect “a phone that was at the end of its refresh cycle, not the start of a new one — as has been the case in September quarters in the years past,” Gillis says. And when it comes to the iPad, Gillis believes that Apple needs to “set mind-blowing records,” which may be too much to ask, what with upcoming tablets from rivals like Amazon, which are “willing to lose profit to gain market share.”
Gillis believes that Apple will sell 9.5 million iPads during the quarter at an average price of $650, which he says is “notably below” the expectations from Wall Street. That means the company could soon drop below $400 a share, “possibly even this week after the earnings report on Tuesday,” Gillis says.
Apple stock is already down 1% in afternoon trading, according to Deadline, while the overall market is down about 2%.
While Apple’s stock price is always going to fluctuate, I don’t see it dropping significantly anytime soon — especially not while the iPhone 4S is selling like hot cakes, and rumors of an iPad 3 have already began.
Having said that, I’m no analyst. What do you think?