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Apple Removed From Goldman Sachs' Conviction Buy List

By Evan Niu, CFA - Apr 2, 2013 at 4:26PM

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Less than two months after reiterating, Goldman Sachs is taking Apple off of its Conviction Buy list.

Goldman Sachs has removed Apple (AAPL 4.08%) from its Conviction Buy list, less than two months after reiterating the same rating in February. Analyst Bill Shope does not believe that the iPhone 5 has generated the levels of growth that investors were expecting, underscoring the importance of the next product launch.

Apple had been on the firm's Conviction Buy list since December 2010, and Goldman still rates the Mac maker a "buy." Shope reduced his price target on Apple from $660 to $575 to reflect lower estimates for fiscal 2013. The analyst now expects Apple to generate $190.3 billion in revenue in fiscal 2013, down from the previous estimate of $193.8 billion.

Shope expects the company to release an affordable iPhone to target emerging markets this year.

Like others, Shope believes that Apple will soon announce a way to use its massive cash pile for the benefit of shareholders. If the company announces a substantial dividend increase or a stock buyback, it could provide "a healthy floor" for the stock price, he said. Still, the analyst said that he believes the stock's outperformance over the next 12 months "will be more closely tied to the timing and success of Apple's next batch of product refreshes."

Apple's stock fell $1.01, or 0.2 percent, to $427.90 in afternoon trading today, while the Nasdaq was up 0.2 percent. Apple's stock price is close to its one-year low of $419, hit a month ago. It's well off its all-time peak of $705.07, reached in September on the day the iPhone 5 went on sale.

The Associated Press contributed to this report.


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