Apple's Road To $800 Is No Vector
Nicholas is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple (NASDAQ: AAPL) stock has plunged nearly 17 percent since notching $705 per share in September. Apple rallied following the launch of iPhone 5 and the overwhelming, historical preorder level of 2 million units, within the first twenty-four hours. However, the iPhone maker faced a myriad of quandaries including negative consumer reviews of its new device as well as patent infringement accusations by competitors. Additionally, Apple encountered bottlenecks in the iPhone 5 supply, extending online deliveries by at least two weeks.
Nonetheless, as curtains fall for the year 2012, the tech giant has overcome a majority of the obstacles, if not all. In a recent survey conducted by Piper Jaffray analysts, Apple's iPhone 5 is now fully, available across major networks. The device returned results of between 90 and 100 percent availability among major carrier networks. Verizon Communications (NYSE: VZ), which was badly affected by the device, stock-outs, indicated that it had 90 percent availability while Sprint Nextel (NYSE: S) had 100 percent iPhone 5 availability.
Additionally, the waiting period before the delivery of online purchases reduced to just one week, which justifies that the device is now fully available and in abundant. Apple's has also been rumored to be facing supply bottlenecks for its new generation of iPads and iPad mini. Therefore, iPhone 5's abundant availability is good news for the iPhone maker. The company's stock has been on a downward since late September, but now seems to be on an upward recovery, albeit with some few drawbacks.
Apple's supply chain companies also posted impressive results in their Financial quarter 4. Qualcomm (NASDAQ: QCOM) the world's largest producer of smartphones memory chip posted results that beat analyst estimates and predicted that revenues will grow by double-digits in 2013. This is an indication of the semiconductor company's expected sales for the year. The company has since overcome Intel (NASDAQ: INTC) (the PC memory chip producer) in terms of market share in the business.
Latest reports also exhibit that, Apple intends to launch iPhone 5 in at least 50 additional countries by the end of the year including China, the world's most populated country. Currently, iPhone 5 is available in 47 countries, mainly North America, Europe and far East Asia. Apple was highly expected to launch the device in China during the March quarter, 2013.
However, these recent developments have impacted on analyst estimates with Canaccord Genuity analysts revising their December quarter estimates upwards from 45 million units of iPhone sales to 47.5 million units. Subsequently, the analysts reduced their March quarter estimates from 47.5 million units to 46 million. The net change is an addition of one million units of iPhone to be sold within the two quarters from the previous sum of 92.5 million units, which sums up to 93.5 million units. Apple also announced that it intends to launch iTunes App store in 56 additional countries by the end of the year to bring the total number of countries to 116.
Apple is the world's most valuable company by market capitalization, with only the likes of Google and JPMorgan Chase coming close. Some analysts even believe that Apple might easily reach the $1 trillion market cap value within the next three to five years. A majority of the analysts still have a Buy rating on the stock with price targets ranging from $750 to about $900. Nonetheless, I believe it wouldn't be such a long shot to say that Apple has what it takes to trade at around $800 within the next 12 months. Canaccord analysts have a price target of $800 on the stock. However, based on recent developments, it is obvious that the road will not be staright. Headwinds await in all forms and from all units; it is a tough battle and one that can be won.
The company's worldwide launch seems to have come at an opportune time as it deciphers to develop a momentous rally. The tech giant holds the lion's share in the tablets business with approximately 60 percent while Samsung Electronics Co. Ltd comes in second. Amazon and Korean based Asustek Computers, which partnered with, Google to develop the Nexus 7, follow accordingly. Apple's introduction of iPad mini will help it battle in the low-end market while its fourth generation of iPads will also help boost revenues over the next two quarters.
Apple closed at $575.85 on Tuesday, down 1.76 percent from Monday's close.
Nmaithya has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, Intel, JPMorgan Chase & Co., and Qualcomm. Motley Fool newsletter services recommend Apple, Amazon.com, Google, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!