updated 12:36 pm EDT, Wed September 11, 2013
Key firms degrade AAPL from 'buy' to 'neutral'
Apple stock has dropped by over five percent -- or more than $26 per share -- in Wednesday trading so far, a reaction to yesterday's announcements of the iPhone 5s and 5c. Reactions appear to concentrate on the 5c, which some analysts had hoped would be priced $400 or less without a contract. Instead, even the cheapest 5c is $549 unlocked, only hitting its advertised $99 pricetag when linked to a two-year contract.
Several major firms -- Credit Suisse, Bank of America Merrill Lynch, and UBS -- have downgraded Apple from "buy" to "neutral." One of the exceptions is Canaccord Genuity, which has raised its price target from $530 to $550 on the strengths of the iPhone 5s. The 5s has features many Android phones don't, he notes, such as a fingerprint sensor, a motion coprocessor, and a 64-bit CPU. "We believe new capabilities in iOS 7 available Sept. 18 along with the features and new colors for the 5s and 5c should drive strong sales, particularly to Apple's large iOS base," he adds.
Although the 5c's pricing should keep Apple profit margins high, it poses an obstacle in markets like China and India. A 5c can cost as much or more than a person's monthly salary in those countries, making it unattractive next to Android devices, which can have many of the same features for $100-200 less.