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UBS: Apple cutting orders for Apple iPhone 5 parts is old news; shares rebound after breaking $500

UBS: Apple cutting orders for Apple iPhone 5 parts is old news; shares rebound after breaking $500
Shares of Apple briefly dropped under $500 on Monday, breaking a major support level on a WSJ story that said that Apple had cut orders for displays and other components because of weak demand for the Apple iPhone 5. But shares of the stock rebounded off the lows after investment house UBS said that the news cited by the WSJ was old and that the cuts in orders for displays and components related to the Apple iPhone 5 actually took place in December. Analyst Steve Milunovich told his clients in a research note on Monday that "Consequently, it appears this is old news—our analysts indicate no changes since."

Last month, UBS cut its estimate of Apple iPhone production by 5 million for each quarter because of a 30% production cut  That took the UBS estimate for Apple iPhone 5 production down to 25 to 30 million units for the current quarter ending in March. Milunovich estimates that Apple produced 45 million Apple iPhone 5 units in the previous quarter that ended in December and says that there could be an upside surprise when Apple reports earnings for its latest quarter on January 23rd.

The analyst sees Apple caught between peaking growth and margins, and a low valuation. He says that a tech stock's momentum usually rules which means that Apple could drop further. Still, Milunovich sees a strong December quarter and with the stock trading at just 8 times forward earnings, the analyst has kept his buy rating with a target of $700.

Esrlier on Monday, the stock briefly dipped below $500 at $498.51 and has come off the lows trading now at $505.04, off $15.26.

source: Forbes

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