Is Apple Headed for $600?
Apple (NASDAQ:AAPL) stock recently set a new high for the year when it topped $550 in early Friday morning trading. The previous high for 2013 was set on January 2 when the stock hit $549.03. Although Apple may not rise to the $700-plus levels that were seen in September 2012, there are several tailwinds that indicate that the stock may be heading even closer to $600.
Interestingly, the recent stock movement occurred in the middle of Black Friday, the traditional start to the holiday shopping season. This suggests that investors are fairly optimistic about Apple’s ongoing holiday season sales. Although a recent consumer survey conducted by the American Research Group suggested that shoppers were planning on spending less this year, the popularity of Apple’s most recently released devices may help the California-based company to buck the declining consumer spending trend.
For example, a Consumer Electronics Association Pre-Black Friday Survey cited by Cantor Fitzgerald analyst Brian White showed “31 percent of U.S. adult shoppers plan to purchase consumer electronics over the weekend.” Furthermore, “The most sought after item is expected to be tablet computers.” The recent introduction of the 9.7-inch iPad Air and 7.9-inch iPad mini with Retina display gives Apple new competitive entries in both the full-size and compact tablet markets. Both of these devices will likely further boost Apple’s December quarter sales and overall investor confidence in the company.
Apple will also likely derive more profits from the sale of its latest flagship tablet. According to a preliminary teardown done by market research firm IHS iSuppli, the new iPad Air has a lower bill of materials than previous iPad iterations. The higher profit margins will likely further improve Apple’s fourth quarter earnings and drive the stock even closer to the $600 threshold. Another tailwind for Apple’s stock price is the company’s long-rumored distribution deal with China Mobile (NYSE:CHL). China’s official Xinhua news service recently announced that China Mobile will be the first carrier to offer 4G mobile services when the country launches its commercial 4G mobile communications network on December 18. Xinhua’s unnamed insider sources also noted that China Mobile will begin offering the TD-LTE versions of Apple’s iPhone 5S and iPhone 5C on the same date.
With over 750 million subscribers, China Mobile is the world’s largest carrier and a partnership with Apple could provide a further catalyst for an increase in the iPhone maker’s stock price. Mizuho Securities analyst Marvin Lo recently noted the impact that a China Mobile deal could have on Apple’s overall presence in Asia via the Wall Street Journal. “A deal with China Mobile would give Apple a big boost in the China market as the largest local carrier has the most wealthy subscriber base,” stated Lo. “I estimate that among China Mobile’s more than 700 million mobile subscribers, at least 10 percent or 70 million wealthier ones would be potential customers for iPhones.”
Thanks to Apple’s timely debut of its two new tablets and its rumored upcoming deal with China Mobile, the iPhone maker may soon see its stock climb up near the $600 level. Here’s how Apple has traded since the beginning of the year.
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