Nasdaq rebalancing seen as a buying opportunity for Apple investorsApple will be negatively impacted by the decision to re-weight its stock on the Nasdaq-100 Index, but the company's fundamentals remain strong, presenting a buying opportunity for investors.
Analyst Brian White with Ticonderoga Securities said the announcement on Tuesday that the Nasdaq would rebalance AAPL stock from 20 percent to 12 percent of its index of the 100 largest nonfinancial stocks is just the latest in a series of headwinds for Apple's market performance. The rebalancing, he said, adds "more noise to a loud past few months."
"Despite strong demand for Apple's products and a very successful launch of the iPad 2, the stock has been battling headwinds such as today's rebalancing announcement, along with concerns regarding Japan, Steve Jobs' health, concerns regarding a delayed iPad 2 launch (this was proven false), the timing of the upcoming iPhone 5 launch and general market noise," White said.
He believes these concerns will eventually subside, allowing investors to again focus on the company's fundamentals. White believes the company's stock will reach new all-time highs as the year progresses, as products like the iPhone, iPad and Mac lineup continue to experience year over year growth.
Specifically, he believes that continued strong demand for the iPad 2 epitomizes Apple's current success. Demand for Apple products is predicted to be a "phenomenon" that will continue to bring earnings surprises over the next 12 to 18 months.
"We also believe the buzz surrounding the iPad 2 launch is also driving a further halo effect around Apple's existing portfolio as consumers are drawn into stores," he said.
Ticonderoga Securities has a 12-month price target of $550 for AAPL stock, and a recommended buy rating for investors.
On Topic: Investor
- Berkshire Hathaway increases Apple position to $1.46B
- Apple's board chair & general counsel sell over $10M in personal stock
- Apple Inc. gears up to distribute $3.2 billion in dividends to shareholders
- Apple issues $7B U.S. bond to fund stock buybacks, corporate initiatives
- Apple's iPhone falls from 3rd to 5th in China smartphone marketshare