Apple Shares' Best Streak in More Than 2 Years
September 16 2016 - 12:50PM
Dow Jones News
In a rough week for stocks, Apple Inc. has soared.
Shares in the Cupertino, Calif.-based company rose 12% this week
through Thursday, their best four-day streak in more than two
years. Apple was the top performer in the Dow Jones Industrial
Average on Thursday, and the only stock in the blue-chip index to
gain during a selloff Tuesday that sent the Dow industrials down
1.4%.
Apple was the most-active stock in both the Dow industrials and
S&P 500 on Thursday, gaining $3.80, or 3.4%, to $115.57. Shares
retreated 0.4% in early trading Friday.
Apple's strong week follows a recent stumble. Shares fell almost
5% in the two days after last Wednesday's iPhone 7 unveiling,
briefly sliding into negative territory for 2016. Some reviewers
said the phone offered only incremental improvements over previous
versions, such as better battery life and water resistance, instead
of dramatic new features. The removal of the phone's headphone jack
was also a polarizing decision.
Early adopters showed up as usual. Apple said it has already
sold out of some versions of the new phone since preorders started
last week. That came after T-Mobile and Sprint suggested strong
demand without giving numbers. Shoppers lined up to buy the new
phones Friday.
Several investors and analysts said hints of strong sales were
enough to demonstrate the the loyalty of Apple's customers, after
iPhone sales fell for two consecutive quarters. Meanwhile, Samsung
Electronics Co. is recalling its competing Galaxy Note 7 smartphone
because of battery fires.
"This shows that the user base is loyal and wants to upgrade
either when new tech comes along or when their new phones wear
out," said Jim Tierney, chief investment officer for concentrated
U.S. growth at AllianceBernstein Holding LP, who holds Apple
shares.
Apple didn't respond to a request for comment.
Technology shares have also been rallying broadly. Tech stocks
have soared 11% in the past three months through Thursday, almost
twice the gains of any other group. That is also a change from
earlier in the year, when a sharp dive in tech highlighted investor
concerns about slowing U.S. growth.
Apple has been big driver of those recent gains. Tech is the
only S&P 500 sector to rise this month, climbing 1.5% through
Thursday as the broader index fell 1.1%. Excluding Apple would cut
tech's gain to 0.2%, according to S&P Dow Jones Indices, noting
Apple remains the biggest company in the index by market cap.
Without Apple, the S&P 500 would be down 1.4% in that
period.
Some investors and analysts said Apple still has room to run.
The company traded at about 13 times its last 12 months of earnings
as of Wednesday's close, compared with almost 20 for the S&P
500, looking like a relative bargain at a time when many investors
are concerned about stretched valuations.
RBC Capital Markets analysts led by Amit Daryanani adjusted
their target price for the company upward to $120 from $117 a share
Thursday, maintaining a rating of "outperform" and saying the
current price still offers a good entry point for investors and the
company has been a relative oasis in recent market volatility.
RBC said worries remain that innovation is declining at Apple,
with new sales driven more by existing owners replacing phones than
new customers buying in. But it has attractive valuations, gross
margins that are at least stable and a consumer-friendly ecosystem
of hardware and software integrated across multiple devices that
would be difficult for competitors to replicate.
Write to Aaron Kuriloff at aaron.kuriloff@wsj.com
(END) Dow Jones Newswires
September 16, 2016 12:35 ET (16:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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