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Apple investor fears about China & iPhone 6s are 'overblown,' FBR says

As shares of Apple continue to hover just above $100, investment firm FBR stood by the iPhone maker on Monday, saying that the overly negative sentiment on Wall Street is not justified.




Analyst Daniel H. Ives acknowledged that while Apple stock is in a "turbulent" period, he believes investors should buy in while shares are affordably priced. To him, fears over growth slowing at Apple are "overblown."

"We believe Bearish sentiment has swung too far now, as (Apple CEO Tim) Cook has a relatively low iPhone unit bar for the dreaded March and June quarters," Ives wrote.

Admitting that Apple stock has seen a "miserable, dark period over the last few months," Ives believes investors are underestimating the company's potential heading into 2016. In particular, he anticipates an "iPhone 7" upgrade in September to reignite growth, attracting many users who have not yet upgraded to a larger iPhone screen size.

In the interim, he believes the iPhone 6s has seen "less than stellar" demand, but is still in a position to exceed expectations in the coming quarters.

"With our initial read on the December quarter/holiday season coming in relatively strong, we believe Apple should be able to hit the Street's iPhone forecasts for (the first quarter of calendar 2016) and that March/June estimates are now achievable with supply chain data points."

Shares of Apple fell Monday, the first day of trading in 2016, amid significant drops across the U.S. markets. The losses were attributed to reports out of China suggesting its economy is slowing down.

China has proven to be an especially pivotal part of Apple's continuing growth strategy, as the country will soon become the iPhone maker's largest.

Ives believes that China will remain the "main fuel tank" for Apple as it pushes into 2016. He sees the company selling more than 220 million iPhone units this year, which he called a "commendable achievement for an 'S' product cycle."

Though FBR is standing by Apple, the firm did cut its estimates last month amid fears of the iPhone 6s not driving growth. The firm has nevertheless maintained an "outperform" rating for shares of AAPL, with a price target of $150.