Apple Shares Down 11 Percent on Fourth-Most-Profitable Quarter Posted by Any Company Ever

Apple on Wednesday reported earnings that were impressive by normal standards — indeed, its first quarter was the fourth-most-profitable quarter posted by any company ever. But on Thursday morning the company’s shares fell more than 11 percent to $450.66, as investors that had been hoping for an old-school Apple beat reacted to earnings and guidance they found disappointing.

The euphoria that carried Apple’s stock to a record high of $702.10 last September seems to be over — for the moment, anyway. Some 18 brokerages cut their price targets on the company’s stock today. Among them, Topeka Capital’s longtime Apple bull Brian White, who finally trimmed his $1,111 price target on Apple to $888.

That said, there are a few on Wall Street who sounded optimistic notes, even while advising caution. Now that Apple’s guidance is “real” rather than deliberately conservative, investor expectations for its performance should grow more realistic.

More to the point, the market’s current pessimism is probably not an accurate reflection of Apple’s momentum. Remember, in the just-reported quarter it sold 28 percent more iPhones and 48 percent more iPads. Sure, Apple sold only 47.8 million iPhones, short of the 50 million many had hoped. But, for crying out loud, it sold 47.8 million iPhones. In a single quarter.

“We believe a capitulation process is underway — and while painful — it is healthy since the loftiest expectations should be reined in quite a bit,” Barclays analyst Ben Reitzes wrote in a research note today. “This spring, Apple should be readying a bevy of new products and services — and when the builds for these products become known — shares may act a lot better. We have seen sentiment turn quickly before with other leaders like Facebook (in 2012) and Google (in 2011).”