Apple shares fall 11 percent on outlook concerns
NEW YORK (Reuters) - Apple Inc (AAPL.O) shares on Wednesday tumbled more than 12 percent to their lowest level in four months amid concerns about the iPod maker's outlook, but many Wall Street analysts still expect the stock to recover.
The shares fell $19 to $136.51 in early trading on Nasdaq, where it was the most active issue, after Apple on Tuesday said it saw its quarterly profit below analysts' expectations.
Apple's weaker-than-expected outlook fueled concerns consumers were cutting spending, and dragged on the broader stock market, traders said. Analysts said the Apple guidance and lingering worries about the credit crisis were adding to investor unease.
Several firms shifted their opinions after the quarterly report, including Caris, which cut its rating on Apple to "above average" from "buy."
However, others were less pessimistic, choosing instead to trim their price targets to levels still above $200, a summit that the iPhone and Mac computer maker topped only briefly in December.
Citigroup cut its price target to $212 from $215 while RBC trimmed its view to $200 from $215. Bear Stearns analyst Andy Neff cut his target to $220.
"While our concern remains on the potential for a slowdown in consumer spending, we view the stock's after-market weakness as a buying opportunity as Apple is on the cusp of multiple product cycles," he said in a client note, referring to new product introductions.
In lowering his price target to $175 from $220, Goldman Sachs analyst David Bailey said Apple will need to shore up Mac and iPhone sales as iPod growth slows.
"Apple has fundamental and valuation underpinnings, which should allow the stock to outperform on an absolute and relative basis longer term, and we are maintaining our Buy rating," he said in a note to subscribers.
While he expects the shares to meet his target by the end of the year, Bailey said Apple shares continue to carry a multiple higher than other stocks he covers.
(Reporting by Franklin Paul, editing by Maureen Bavdek)
