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ABG Sundal Collier Reiterates Hold Rating on Apple Following Icahn Announcement

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In a report published Wednesday, ABG Sundal Collier analyst Per Lindberg reiterated a Hold rating and $400.00 price target on Apple (NASDAQ: AAPL).

In the report, ABG Sundal Collier noted, “While Carl Icahn's announcement of a ‘major' investment may inspire hopes of an accelerating buyback programme, we surmise that an apparently increasingly active debate about the capital structure will be overshadowed by the imminent launch of the next batch of iPhones and iPads powered by an entirely new operating system. The significantly overhauled successor to the visual interface which Apple's fan-club has been conditioned to love comes with unmistakable commercial risks. Software glitches, as customary, will be very hard to conceal. Feature enhancements are likely to be deemed insufficient to close the gap to those of the Android community, notably Samsung. Production delays loom large as integration of fingerprint sensors prove more difficult than envisaged. Initial shipments in the current quarter of iPhone 5S may therefore fall well short of management's original plan. Such an issue should not be taken lightly considering the complexity of the OS transition. Word is out that Apple will discontinue production of iPhone 5 once ‘5S' hits distributors' shelves, presumably by the end of September. As a corollary, unlike the situation recently, the new model – possibly complemented by a ‘budget variant' – will carry the full ‘weight' of increasingly demanding ‘comparisons'. We would not be surprised if iPhone deliveries begin to decline on a year-on-year basis in the latter part of calendar 2013 and/or early 2014. If so, the initiatives of activists to extract more cash from the company's (rich) coffers may be reduced to issues of ‘lesser importance'.”

Apple closed on Tuesday at $489.60.

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