Though Apple’s U.S. retail sales have been particularly weak over the last two months, and despite the current weak PC “demand environment,” Wit SoundView, an investment-banking firm, believes Apple is showing some signs of “solid execution” and looking good for the future.
“With several catalysts on the horizon and with the company in the middle of several new product cycles, we believe AAPL [Apple] shares have a solid chance of outperforming the S&P 500 over the summer months,” a Wit SoundView analysis said. “We reiterate our buy rating.”
Among the company’s signs that Apple is “executing well” are:
The company also added that “catalysts” are on the horizon. Wit SoundView thinks that the US consumer demand for personal computers has stabilized for the last 2.5 months and a “snap back” in consumer demand could be a boon for Apple. The company also lists the possibility of a flat panel iMac introduction as boosting “tired” sales of the consumer desktop.
Apple also faces “moderate exposure” to weakness in Europe and Japan. Wit SoundView estimates that Europe and Japan will represent about 19 percent and 13 percent of sales in the June quarter, respectively. (In the March quarter, Europe and Japan represented 25 percent and 15 percent, respectively.)
“Apple is in the middle of several new product cycles, which could help drive the stock,” Wit SoundView said. “Over the last five years, Apple’s stock has handily outperformed the S&P 500 six, nine and 12 months after each major professional product launch.”
Their analysis pointed out that over the last four years, Apple’s stock has also outperformed the S&P 500 by an average of over 31 percent in July and August. Wit SoundView attributed much of the out performance to investors’ anticipation for the back-to-school buying season, which starts in July and ends in September.