Shares of Applefell from a record after a boutique research firm said that apparently plentiful inventory and lack of positive chatter suggest that new iPad sales may fall short of Wall Street’s lofty expectations.
“We wanted to highlight something we have noticed of late that gives us pause, and forces us to take the sidelines here at nearly $620 per share,” wrote Brian Blair, technology analyst for Wedge Partners, in a note to clients. “We’re concerned iPad sales may not be as strong as expectations, and we believe March could disappoint and full year production iPad expectations/forecasts may be pulled down as a result.”
Apple dropped as much as 2.3 percent from a record intraday high of $621.45 reached during trading one day ago. The shares remain up more than 50 percent on the year.
Wedge Partners, a 10-year old independent research firm based in Denver Colorado, had expected 56 million to 60 million units to be sold in 2012. Now Blair believes the low end of that range, or even lower, is possible.
“Since launch day, we've been able to walk into any Apple store and get one,” wrote Blair. “Online, the orders quickly shot to a 2 to 3-week shipping delay. They are now down to a 1- 2 week delay and our concern is demand may be waning somewhat after 2 weeks. Either way, there seems to be a disconnect between in-store and on-line availability of the new iPad.”
Wedge's analysis breaks rank with the overwhelming majority of other research groups, who mostly continue to be uber-bullish on Apple. The stock has more than 40 “buy” ratings on it, five “hold” calls and just one “sell” rating. At least 9 firms have price targets above the $700 mark.
To be sure, Wedge maintains an “Outperform” rating on Apple. Blair is simply making a short-term trading call for investors to move some money to the sidelines until after Apple's first quarter earnings report.
Apple said on March 19th that it had sold three million new iPad’s in its first three days on sale, helping rocket the stock higher. But Blair isn’t convinced that hot start will carry through the rest of the year.
“Much of the world isn’t on 4G/LTE yet so the 3G iPad 2 is sufficient,” states the note. “Some reviews suggest the new iPad is ‘not different’ enough. We think the screen is a huge technology leap, but what matters is end demand.”
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