Analyst: Buy Apple Now!

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Apple (NASDAQ:AAPL) has fallen more than 8 percent over the past three days, ending Thursday in official bear-market territory. But according to Oppenheimer & Co analyst Ittai Kidron, the sell-off is overdone and Apple has the potential to rebound to above $600 soon. “We are buyers of Apple on recent weakness,” Kidron wrote in a research note to clients. “We see good potential for a near-term rebound to ~$620 before experiencing resistance.”

While the analyst noted that investors’ concerns were legitimate, considering shares were down more than 20 percent from their September 19 peak of $702.10, Apple’s competitive position remained unchanged. “[T]he shares embed too much pessimism regarding headwinds and execution” because “Apple’s competitive position is unchanged and [we] see it better positioned with a refreshed portfolio across all key segments heading into 2013.”

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Apple’s stock currently reflects worries about the falling share of the iPad in the tablet market, recent management changes, and the predicted drop-off in margins. According to the analyst, the company’s “measured December guidance reflects a complicated and extensive product transition across iPhone/ iPad/Mac, which stretched Apple’s supply-chain and internal resources.”

Kidron also calmed fears about the looming fiscal cliff, which will automatically usher in higher investment and dividend taxes in 2013 and is prompting investors to sell now. The analyst said it was a temporary concern. “Tax questions,” he wrote. “Investor concerns about looming dividend tax changes and uncertainty around a new capital gains tax policy are a persistent noise. This could cause some selling to lock-in gains, but it would also be a temporary phenomenon and is embedded into our thinking regarding the $620 resistance level.”

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