Between September and April, there was an overwhelming cloud of negativity surrounding Apple ; shares plunged for months on end. Investors focused solely on the bad, while wholly ignoring the good. Competition from Samsung has been escalating. Margins were facing a tough comparison to 2012 results. Apple's unreasonable cash position kept getting more unreasonable.
These are all valid gripes, but shareholders were still throwing the iPhone out with the bath water. The negativity has seemingly come to an end following Apple's last earnings release, in part because the company addressed the criticisms over its capital allocation program. I'm not the only one who thinks that Apple just changed the conversation.
Word on the Street
Barclays analyst Ben Reitzes was out this morning with a bullish note, reiterating an "overweight" rating while boosting his price target from $465 to $525. The analyst is encouraged by the healthy rally that Apple has maintained since earnings, downplaying some of the longer-term margin concerns. Gross margin last quarter took a big hit from depreciation and warranty accruals, the latter of which is a temporary hurdle.
More importantly, Reitzes believes that Apple is now "taking control of the narrative" following months of pessimism. Immediately after earnings, Apple set official dates for its Worldwide Developers Conference, which will highlight new software and services. It's been a dry spell between Apple product announcements, but the WWDC opening keynote is now on the horizon.
The analyst believes that WWDC has numerous potential catalysts in store. Apple could detail a new mobile payments solution to leverage its 500 million active iTunes accounts, unveil an iRadio music streaming service, or further beef up iCloud and Siri. The WWDC announcement should satiate investors and consumers until "this fall," when Apple is expecting to show off new hardware to integrate with those software and services.
Apple loves to control things, and it just took control of its news flow for the better.
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