Analysts, Options Traders Divided on Apple Inc. (AAPL)

Nomura has high hopes for Apple Inc. (AAPL), despite the stock's historic struggles

Jun 21, 2016 at 10:17 AM
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Nomura struck an upbeat tone in its latest analysis of Apple Inc. (NASDAQ:AAPL). While maintaining a "buy" rating and a $120 price target on the stock, the brokerage firm said it expects the tech giant to turn things around in the fiscal first quarter, citing an uptick in the handset replacement rate, among other considerations. "We expect Apple should be able to hold its 90%-plus retention rate, grow the iOS base, and ultimately restore unit growth," Nomura explained.

This is par for the course when it comes to analysts. Of the 30 brokerages tracking AAPL, 25 have handed out a "buy" or better endorsement, compared to four "holds" and just one "strong sell." In addition, the stock's consensus 12-month price target of $124.79 represents 30% upside, relative to the current price.

On the flip side, options traders have taken a more skeptical view in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AAPL speculators have bought to open 0.72 puts for every call. Although call-skewed on an absolute basis, the reading ranks in the high 95th annual percentile -- suggesting options traders have purchased new puts over calls at an accelerated clip, relatively speaking.

Echoing this is AAPL's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 1.17. This ratio indicates put open interest outstrips call open interest among near-the-money strikes in the front-month July series.

Rounding out the sentiment picture, short interest recently exploded on AAPL. During the latest reporting period, the number of these bearish bets jumped nearly 79%. Currently, almost 100 million shares are dedicated to short interest.

Apple Inc. (NASDAQ:AAPL) doesn't deserve any better, either, based on its technical performance. Despite being up 0.8% this morning at $95.83, the stock has surrendered one-quarter of its value on a year-over-year basis. By contrast, this AAPL supplier continues to tear up the charts.

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