Apple Inc. (NASDAQ:AAPL) shares have not been impressive this year, and are down 8 percent year to date (YTD) compared to a 15 percent gain for the S&P 500 Index, yet despite this analyst Brian White at Cantor Fitzgerald believes that the stock “is in the midst of a recovery.” White is of the opinion that Apple Inc. (NASDAQ:AAPL) will enter a whole new product cycle soon with updates to existing products.
The new lineup will help the iPhone maker to penetrate deeper into existing device categories and explore new market opportunities.
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
New product cycle will end investors’ worries
The last year has been a challenging one for Apple Inc. (NASDAQ:AAPL) as the premium segment for smartphones “hit a wall” and many new product categories “did not come to fruition.” Many Apple investors also share the same thought, but things are expected to change with the upcoming product cycle that will “ramp over the next 12-18 months,” says the analyst.
After a gap of almost eight months, Apple hosted the Worldwide Developers’ Conference in June, which White believes is the first event marking the new product cycle. However, the new product cycle is believed to start with the unveiling of next-gen iPhone 5S and low cost iPhone 5C on September 10.
Apple expanding iPhone franchise with low cost model
Apple’s iPhone were mainly catering to the higher-end smartphone market because of which the company was unable to tap almost 60 percent of the smartphone market. But, with the upcoming low cost plastic-encased iPhone 5C, Apple Inc. (NASDAQ:AAPL) will expand its iPhone franchise to seize the other segments of the market.
New innovative products to continue
Apple Inc. (NASDAQ:AAPL) is known for its innovation and new product categories. Over the years, the Cupertino based firm has forayed into several new product categories, which has the helped the company to enhance its “addressable market.” Also, White believes that the trend is going to continue again over the next 12-18 months, with Apple coming up with new products like “iTV” and “iWatch.”
Apple a ‘Buy’
Initiating coverage on Apple Inc. (NASDAQ:AAPL), White gives a Buy rating with a 12-month price target of $777, and believes that the stock is attractive with “CY14 P/E (ex-cash) of just 7.6x.” Despite Apple having an impressive track record than that of S&P 500, and “our expectation of higher growth rates in the future,” White has used S&P 500 P/E multiple for the valuation purpose, which is well below the company’s historical P/E of 19x since 2007.