Apple Inc. Bulls Point To New Patents, Expected Catalysts

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What will it take to turn Apple Inc. (NASDAQ:AAPL)’s bulls into bears? At this point, it seems like nothing will. They’re still banking on future products which we have no sign actually exist. Analysts at BMO Capital markets bumped up their target price for Apple stock, while those at UBS highlighted recent patents the company has filed.

Reading into Apple’s patents

In a report dated April 4, 2014, UBS analysts Steven Milunovich and Peter Christianson note that innovation is Apple Inc. (NASDAQ:AAPL)’s “lifeblood.” There’s been some debate on this topic, but the lack of a new product has scared investors into thinking all the innovation bled out of Apple after Steve Jobs passed away.

The UBS team states that patents can provide some hints about what Apple Inc. (NASDAQ:AAPL) has planned for the future. In May 2013, they highlighted patents for a digital wallet, automotive integration for iOS, wearable devices, pen computing and gaming. This year, they cover these exact same categories, with the addition of health and the subtraction of the digital wallet.

Highlighting some of Apple’s recent patents

Apple Inc. (NASDAQ:AAPL) revealed CarPlay recently, which is the company’s integration of iOS in cars. The UBS team refers back to their previous note referring to a “car location system,” which they believe will utilize Apple’s iBeacon. In addition, they note that Apple has applied for a new patent for a “Mobile Emergency Attack and Failsafe Detection system.” They said accelerometers would trigger an emergency if there is a sudden shock to the car of some sort.

The UBS analysts call Apple Inc. (NASDAQ:AAPL)’s health-related patents “all the rage,” noting that the company has hired several healthcare experts, which basically confirms that the company is working on some healthcare-related items. They expect to see pulse monitors, glucose sensors and pedometers from Apple. They also point to Apple’s patent called the “Sports monitoring system for headphones, ear buds and / or headsets,” which they believe suggests many “interesting locations for sensors.”

They note that Apple Inc. (NASDAQ:AAPL) stock has been “fairly listless” but say that it is still “in an uptrend.” They maintained their Buy rating and $625 per share price target, as they believe Apple stock might “act better” over the summer as investors anticipate new products.

BMO Capital raises price target

In a report dated April 4, 2014, BMO Capital analyst Keith Bachman and his team retained their Outperform rating and bumped up their price target for Apple stock from $560 to $565 a share. They also increased their earnings per share estimates because of the company’s aggressive buybacks. They estimate that with Apple Inc. (NASDAQ:AAPL)’s recent purchase of $14 billion worth of its stock, the share count fell by about 22 million to 880 million shares in the March quarter.

They’re expecting the company to buy back about $35 billion worth of shares in the 2014 and 2015 fiscal years. That’s compared with $40 billion over the last 12 months.

Apple’s June estimates may be too high

The BMO team believes that estimates for Apple Inc. (NASDAQ:AAPL)’s June quarter could be too high, especially for revenue. They’re projecting $36.6 billion in revenue, which is below consensus estimates of $38.6 billion.

However, they see three main catalysts going forward. They say the bigger iPhone 6 is “important” for the company’s pricing strategy. They also expect some kind of wearable device and additional services, possible including a payments service.

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