StreetInsider.com published an article today, March 24th, examining the potential for Apple Inc. (NASDAQ:AAPL) shares to outperform in the second half of 2014.The article points to two factors that are both likely to provide a boost to the share price over the next few months. The first factor is the upcoming release of the iPhone 6 with a new, larger display. The second factor is the relatively weak competition from high-end, Android-based smartphones right now.
Apple’s new, larger iPhone 6 likely to be a hit
The article begins with a reference to comments in Barron’s weekend edition that the new iPhone 6 with a 4.7- or 5.5-inch display could bring in significant new buyers. One long-time analyst modeled that a well-received larger iPhone could add 10 to 15% to Apple Inc. (NASDAQ:AAPL)’s 2014 earnings. A 15% increase in earnings could translate into as much as a 20% increase in the price of shares.
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The iPhone upgrade rate has been falling over the last couple of years, but a number of analysts project that 2014 will see upgrades returning to peak levels of around 12 to 14% per quarter. Consensus analyst estimates are that improved iPhone 6 sales would add up to $3 per share in earnings for the September and December quarters.
Lack of strong competition
The second factor likely to boost Apple Inc. (NASDAQ:AAPL)’s 2H sales and profits is the lack of strong competition from other smartphone manufacturers. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) are really bit players in the Smartphone market now, and neither Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), HTC Corp (TPE:2498), Sony Corporation (NYSE:SNE) (TYO:6758) or Microsoft Corporation (NASDAQ:MSFT) has a “hot” product to go head to head with the iPhone 6 at this point in time. It could be holiday season 2014 before any truly competitive new flagship models from other manufacturers emerge.
Another wild card in the deck that could come up spades for Apple Inc. (NASDAQ:AAPL) shareholders is the possibility of additional moves by company management to create value for shareholders. A number of analysts have suggested there is a good chance the company will announce a higher dividend or an additional share buyback program when it delivers it’s April earnings report.
Apple Inc. (NASDAQ:AAPL) shares are up almost $6 at $538.82 as of 2:20 PM ET today.