Apple Inc (NASDAQ:AAPL) touched below $508 a share today, nearly 24% below its all-time high of $705.07 the stock reached just two short months ago. Embedded in Apple’s decline has been a myriad of bearish analyses, though the most extreme has been Jeff Gundlach, CEO of Doubleline Capital, who placed a $425 target on the stock by 2013. Even more troubling, a bevy of questionably-sourced “reports” have been distributed throughout the blogosphere, claiming that Apple may switch to a shorter product cycle.
We’re not going to comment on this story any further (you can read our past criticism of this source by following the link), but we’ll give Cupertino bulls this warning from a previous analysis:
Like it or not, Apple Inc (NASDAQ:AAPL) is the most widely-discussed company on the web today, and it will always be subject to chatter, despite its fundamentally cheap valuation.
At a forward earnings multiple below 10.0X and a ridiculously low PEG ratio that is flirting with 0.5, it’s tempting to jump into the stock now, but the valuation argument hasn’t stood up that well over the past couple months. Therefore, it’s our opinion that Apple Inc (NASDAQ:AAPL) needs a bit of a catalyst that can boost its shares back toward a fairer valuation, say in the form of a deal with China Mobile Ltd. (NYSE:CHL) or an above-average first quarter.
Interestingly, one other piece of news that is flying under the radar has to do with the tech giant’s iTunes 11 platform. Originally announced in September, iTunes 11 is expected to have greater Facebook Inc (NASDAQ:FB) connectivity, much in the same form of “sharability” that Steve Jobs had originally hoped Ping would provide. Apple Inc (NASDAQ:AAPL) pushed back the newest iteration of its music purchasing service – which accounts for an estimated 90% of the world’s legal music downloads – to late November, citing the need to “take a little extra time to get it right,” said a company spokesman.
In addition to better social media connectivity, iTunes 11 is expected to have complete synchronization with iCloud, allowing users to transfer their purchases and playlists between devices. It is hoped that these features can help Apple Inc (NASDAQ:AAPL) expand upon the already $6 billion-plus in sales it books from music downloads annually. In case you missed it, here’s a better look at iTunes 11, from the company’s intro presentation earlier this year. Enjoy.