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Apple shares set for iPhone 5 boost: analyst

A 5-year-old boy plays games on an iPhone in the company's flagship store in Beijing's Sanlitun Area, which is one of four official Apple stores in China, July 22, 2011.

JASON LEE/Jason Lee/Reuters

Apple's slipping share price ahead of Tuesday's eagerly anticipated iPhone 5 event may be unusual, but could spell post-launch upside for investors.

"Looking over Apple's stock performance surrounding the past four iPhone launches, the real money was made leading up the iPhone event," explained Brian White, an analyst at Ticonderoga Securities, in a note. "Apple stock has always moved higher in the two weeks prior to the iPhone event, however, this year appears to the exception with an 8 per cent decline in Apple's stock price."

The recent underperformance of Apple shares, combined with a major new product launch, represents a big buying opportunity for investors, according to White.

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"We would rather own Apple than any other tech company in the current environment," he said.

The iPhone 5 launch will be the first of the post-Steve Jobs era, representing a crucial moment for the company's new CEO Tim Cook.

The new phone is expected to run on a dual-core processor with a better camera. There has also been chatter about a stripped-down iPhone 4 to sell into expanding markets such as China.

Apple, however, eschewed its traditional summer launch for new iPhone hardware this year, opting instead to thrust its iCloud into the spotlight at its June Worldwide Developers' Conference. This was a stark contrast to 2010, when Apple unveiled the phenomenally successful iPhone 4 at WWDC.

This year's wait for new phone hardware, however, will fuel demand for the iPhone 5.

"We believe Apple will benefit from pent-up demand and will shatter the 1.7 million iPhone 4's sold in the first three days last year," explained Ticonderoga's White.

Now sold to a record number of carriers, White noted the iPhone can also operate on CDMA networks, and should make inroads into the booming Chinese smartphone market.

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"We also expect Apple to be more aggressive in rolling out the iPhone 5 to international markets during the launch versus prior years, similar to what was experienced with the iPad 2," he said.

Apple set a quarterly record for iPhone sales during its recent fiscal third quarter, selling 20.3 million of the devices, compared to 8.4 million in the prior-year's quarter. In particular, the consumer tech giant noted robust uptake in Asia-Pacific as well continued strong demand from enterprises.

Apple shares dipped $2.69, or 0.71 per cent, to $378.63 on Monday, mirroring the modest retreat in tech stocks that saw the Nasdaq slip 0.52%.

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