Making Sense of GuidanceWhile these numbers arrived better than expected, the Street remained broadly unimpressed, which is understandable. After all, Apple has just beaten lowered expectations. However, shortly after earnings were released -- if you were watching Apple's stock move during the after-hours session -- you probably noticed an initial surge to $427 per share. But it didn't last. Following the company's guidance, which suggested a 10% and 20% decline in revenue and earnings per share, respectively, investors panicked pushing the stock down to $385. The Street realized that in terms of absolute results and guidance, which arrived much lower relative to Street expectations and models, this is arguably Apple's worst performance in almost a decade.
I think this was a brilliant move by the company -- tossing out everything, including the kitchen sink. Now, given that the stock has bounced up almost 15% to $442.78 (Tuesday's close) since reaching $385, I'll be the first to say it -- Apple has bottomed. With a weak third-quarter already expected, investors have to feel good that the worst is over. The stock at current levels still seems too cheap to ignore. Given the revenue the company can still produce, $650 per share is not an outrageous target from here. Consider that even when adjusting out Apple's $145 billion in cash and adding in just modest cash-flow projections, the stock still supports a fair value of $525 today, or 25% higher from here. The good times are not back yet, but investors can certainly wave goodbye to the bad. At the time of publication the author had a position in AAPL. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.