Last summer, Apple (AAPL) was Wall Street’s golden goose, a company that seemingly had no limit to how high its share price could go. These days, Apple is getting absolutely crushed by Wall Street and its shares are down by more than $200 from their peak in September. The question is, do these wild swings in share value at all reflect reality, or are they just a particularly acute case of the wild, bipolar swings we’ve come to expect from Apple stock?
Per StreetInsider, Jefferies analyst Peter Misek sent out a new research note on Tuesday that outlines the case that the recent panic over Apple has been overblown and that the company is still on track to deliver solid, albeit relatively unspectacular, results for its first fiscal quarter of the year next week.
Overall, Misek contends that while Apple might miss some expectations for the holiday quarter, it’s unlikely to be a big miss that would justify the current selloff of Apple shares.
“As word of the earlier production schedule starts to spread, we believe we could see a slight slowing of demand CQ1 in anticipation of the new product launch and Apple will likely start curtailing channel inventory,” Misek writes. “Therefore we tweak down our CQ1 iPhone shipment estimate from 48M to 44M, which is still well above widespread fears of shipments in the mid-30Ms.”
Misek also speculates that Apple could still make a healthy profit off selling a cheaper iPhone model by building it with a polycarbonite case and a 4-inch non-Retina display, while also limiting its connectivity to 3G and Wi-Fi. While this cheaper device would lower Apple’s overall smartphone margins, Misek believes that it would also help the company expand its market share and thus wouldn’t have a negative impact on its quarterly earnings per share.
All of which is a roundabout way of saying: “It’s still too early to panic about Apple.”