Wall Street’s debate over how to value Apple has intensified as the iPhone maker’s stock skirted around the $500 mark yesterday with investors looking beyond strong sales from China and renewed speculation that the group might launch a TV set next year to question its long-term growth prospects.

Shares in Apple have lost more than a quarter of their value since September’s high of $702.10 amid a range of fundamental concerns voiced by analysts about profitability, and technical trading by short-term investors.

Apple is now worth less than $500 billion, a symbolic valuation it first achieved ahead of March’s iPad launch. After dipping below $500 per share for the first time since February ahead of the opening bell, Apple’s shares wavered around $512 during afternoon trading.

Many analysts had suggested that the announcement made yesterday morning in China that Apple had sold a record 2 million units of its iPhone 5 in the country over the weekend would boost its share price.

Price targets

Although only a handful of analysts rate Apple at anything less than a “Buy”, several including Jefferies, Citigroup and BMO Capital Markets have downgraded their price targets over the past week. The average price target is now $754, just 7 per cent above September’s peak, according to Thomson First Call.

In a statement, Tim Cook, Apple’s chief executive, said customers’ response to the iPhone 5 in China “has been incredible” in what he described as a “very important market for us”.

Yet many analysts remain concerned by its slim market share compared with local Chinese manufacturers. Speculation also is growing that Apple may release a cheaper, low-end iPhone to gain a greater foothold in emerging markets. Apple warned in October’s earnings that the iPad mini and other product launches would dilute its margins this quarter.

Rating downgrade

“Despite the news from the weekend, the China story remains a big question mark,” said Colin Gillis, tech analyst at BGC Partners. The declines came as Citigroup, which recently devoted three analysts to covering the shares, downgraded its rating of the company’s stock.

But Katy Hubert, tech analyst at Morgan Stanley, said concern about the sustainability of demand for the iPhone and iPad was misplaced, citing surveys that showed strong demand. – Copyright 2012 The Financial Times Limited