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The lines for the iPad were long, the reviews are mostly glowing and Apple is expected to sell twice as many of the devices than analysts first predicted.
“Our tests over the weekend suggest iPad lives up to expectations,'' declared analysts at Credit Agricole Securities, which raised its price target for Apple shares to $280 from $260 based on the iPad's success.
So why is Apple share price barely budging this morning. At around noon, its shares are up a mere half of a percent at $237.39 in the first full trading day since the iPad was released? Perhaps Apple will be the next Goldman Sachs–a highly profitable company with a share price that has lagged behind peers in recent months.
Consider Goldman. It is up 43% in the past 52 weeks, after the investment bank emerged even stronger after the financial crisis and logged the most profitable year in its history. But since Jan 1, Goldman's share price has stalled, falling 2.5% in the first quarter while the S&P 500 rose 4.5%.
Investors have flocked to other financial companies, such as Citigroup (up roughly 20%) and Bank of America (12%), that have mostly shaken off the bailout blues and found their path back to profitability. As the economy and housing market improve, investors appears to be betting there is greater upside to their share prices as the credit quality of their loans improves.
Of course, the financial crisis didn't rattle Goldman as much as it did Citigroup and BofA, so Goldman's shares in that sense have less room to climb. But even J.P. Morgan Chase, another bank that emerged stronger from the financial crisis, rose 3% in the first quarter.
The near-term outlook for Goldman's investment banking business looks good, but not great. UBS analyst Glenn Schorr pointed out in a recent research note that capital-markets activity was mixed in March, with stock underwriting increasing 71% from the previous month, but M&A activity declining 37% and stock and fixed-income trading falling by single-digit percentages. Financial-regulation changes being debated in Washington also could require financial institutions such as Goldman to reserve more capital and curb some trading activity.
The same sluggish future could await Apple shares. Sure, Apple’s shares are up a blistering 104% since their lows last March, and iPad sales look strong. But how much of the iPad’s success was already figured into the company's 11% rally in its share price since Jan 1? Just as they asked Goldman after its record 2009 profit, investors may be asking Apple after the iPad:
What's next?
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Wow, Apple sold iPad’s but didn’t soar?
Wow, what an acute observation.
Gee, I GOT TO follow the WSJ blog very, very closely, they give insight like no other financial site in the history of Everything!
And Thensome!
Ayuh
Also, unlike GS, Apple makes a high quality product. That’s not a minor detail. Better try a harder next time to create a shocking piece.
the incredible climb in AAPL already reflects the iPad launch, which smart people knew would go very well. If Apple is sluggish, I wish for an entire portfolio of sluggish stocks.
Sorry but this article makes absolutely no sense. The stock has been on a tear unlike GS. usually most stocks including Apple sells off after a major product launce. It is infact up today and i am pleasantly surprised.This stock has a lot of room - new OS just announced so iPhone sales will continue to soar, Ipad will pick up momemtum.
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