After all the hype surrounding the iPhone 5 launch, Applelooks to have only sold 5 million smartphones, not including pre-orders. That, along with news of riots at supplier Foxconnin China and disappointment with the new mapping app, led to profit-taking in Apple shares on Monday.
After a 73 percent run up this year, Wedgewood Partners’ David Rolfe told CNBC the stock was ripe for a bit of profit taking.
But analysts and fund managers remain unabashed Apple bulls.
“Apple always creates a scenario where demand outstrips supply,” Scott Sutherland, an analyst with Wedbush Securities, said in a CNBC interview.
While Sutherland was expecting Apple to move 8 million iPhone 5s, even if they sold 5 million phones, that’s still 25 percent more than they sold at the iPhone 4S launch, he noted.
Topeka Capital’s Brian White said to focus on the pre-orders instead of the weekend sales. “Supply constraints don’t impact pre-orders but they do impact weekend sales,” he said on CNBC Monday.
With Apple selling 2 million iPhone 5s in preorder, “That’s exactly what we saw.”
White also said the iPhone 5 will drive the biggest upgrade cycle in consumer electronics. His checks suggest 35 percent of iPhone 5 buyers were upgrading from the iPhone 4S. “This is going to be a home run,” he said.
Rolfe, who has Apple as the top holding of his Riverpark Wedgewood Fund, agrees that any possible supply issues should prove transitory. “If management says there’s a supply constraint, and then we have a quarter where the supply constraints are off, typically they have a blowout number,” he said. “I expect the same over the next couple of quarters.”
Indeed, Rolfe and Sutherland both expect big December quarters. “If the supply constraints come off, it’s not out of the realm that we could see 240 million, 260 million iPhones in fiscal 2013,” Rolfe said.
Rolfe does concede that there have been issues with Siri and the maps, noting that they’re data-driven problems which aren’t part of Apple’s DNA.
“My only beef with management is maybe they oversold this at the product launch and they could have reduced some expectations,” Rolfe said.
An iPad Mini, expected to launch next month, could also juice Apple shares. Sutherland who has an “outperform” rating on the stock, said, “The stock can go a lot higher with the product pipeline they have.” His $885 price target implies nearly 30 percent upside from recent levels.
Rolfe said fair value on Apple is a slightly more modest $850.
But the biggest bull of the group is Topeka Capital’s White. His price target of $1,111 represents 60 percent potential upside.
—By CNBC.com’s Justin Menza
Additional News: Apple Sells Out of iPhone 5; Weekend Sales Top 5 Million
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Wedbush Securities makes a market in Apple securities.