Down again! How low Apple's stock can go

 

Apple (AAPL) shares got hit again Thursday following their colossal drubbing Wednesday. The question now is: How low can Apple shares go.

Shares of Apple closed down 81 cents, or 0.8%, to $98.12 in late-day trading Thursday as investors cool off from a remarkable bull run this year. Concerns about reports of security issues connected with iPhones and Apple’s cloud service and worries Apple being leapfrogged in smartphone innovation and value are hurting the stock.


The stock is now down 5% from its high of $103.30 notched on Sept. 1. That might not sound like much, but given Apple’s size, the three-day decline has erased $31.0 billion in investor value. That’s greater than the value of more than half the stocks in the Standard & Poor’s 500.

Some of these worries may prove unfounded, something investors won’t know for sure until Apple unveils its rumored new products in a conference next week. And analysts remain overall positive on the stock.

But, when a high-profile stock starts falling like this, investors starting wondering about the bottom. Trying to predict the future of stocks as volatile as Apple’s is a perilous business. But there are a few guidelines that can offer at least some parameters for investors to think about when it comes Apple on the severe downside:

* $57.44. Yep, you read that number right. It might seem like an outlandish figure given where the stock is now. But the fact is, falling to $57.44 would simply be following the same pattern the last time Apple’s stock got this high and cracked. Apple’s stock last peaked at $100.30 on Sept. 19, 2012 on a split-adjusted basis. At the time, some investors were so bullish on Apple they were thought it was the only stock they needed. How wrong they were. Shares of Apple crashed 44.4% until hitting a bottom of $55.79 on June 20, 2013. Following the same decline from the high of $103.30 on Sept. 2, 2014, that would put Apple at $57.44.

Don’t believe this actually can happen? Here’s the chart to proof that it did:

Chart source: MSN Money


* $89.47. Valuation matters when it comes to stocks. And valuation is often considered in comparison to peers. Investors are paying an average of 13.1 cents for every dollar expected to be earned over the next 12 months for the six most valuable publicly traded U.S. stocks in the technology hardware, storage and peripherals industry group, says S&P Capital IQ. Applying that valuation to Apple’s expected adjusted earnings of $6.83 over the next twelve months gets you to a price of $89.47.

Below are the P-E ratios on the six most-valuable stocks in the technology hardware, storage and peripherals industry group:

Company     Symbol     Forward P-E
Apple     AAPL     14.47x
Hewlett-Packard     HPQ     9.74x
EMC     EMC     14.34x
Western Digital     WDC     12.27x
Sandisk     SNDK     16.18x
Seagate     STX     11.54x

Sources: S&P Capital IQ

* $51.43. Investors usually focus on the average price target of all Wall Street analysts. And there’s good reason for going that — since it’s kind of the wisdom of the informed crowd. But sometimes, the outliers can be interesting to watch, too, to see the extremes. And currently, the lowest published analyst 18-month price target on Apple is $51.43, says S&P Capital IQ. These lowball estimates can be a bit mysterious, especially if due to a outdated estimate that was never withdrawn. For a another view, Nasdaq.com reports a much less scary bottom 12-month price target of $94.