Apple, Inc. Stock Upside Seen Thanks To “Fab Fall”

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Apple Inc. NASDAQ:AAPL has scheduled a media event—presumably to unveil the iPhone 6—for next week Tuesday. According to Cantor Fitzgerald analysts, the event kicks off what they are terming Apple’s “Fab Fall.”

Excitement at Apple

In a report dated Sept. 2, 2014, analysts Brian White and Isabel Zhu said that over the last six iPhone introductions, Apple has outperformed the S&P 500 Index by 1.5% in the two weeks ahead of the event and .7% in the two weeks between the event and the date when the new model actually goes on sale.

The analysts believe that the next few months will end up being Apple’s most exciting new product launches in several years. They note that the company is expected to launch not one, but two bigger iPhones and also enter a new product category. They add that details about this year’s ramp have “been the most conflicted” in recent memory.

Great iPhone expectations

The Cantor Fitzgerald team expects Apple to show off a 4.7-inch iPhone dubbed the iPhone 6 and a 5.5-inch iPhone dubbed the iPhone Air. They’re predicting a staggered launch for the two smartphones, however, based on their research at Computex. They believe the smaller iPhone 6 could be available earlier than the bigger iPhone Air.

They note that sales in July in their Apple Barometer were the weakest ever recorded and say that they expect August sales to be strong. They especially expect strong results from Hon Hai, possibly suggesting that there will be a gap between availability or “mass” availability. This would mean that supply of the 5.5-inch iPhone could be tighter at launch. They don’t believe it really matters if both new iPhones are available this month or next, although think it is vital for Apple to launch a 5.5-inch phablet-sized iPhone Air before the end of the year so that it can get a better foothold in China.

Apple expected to unveil iWatch

The analysts also say that they’re expecting Apple to show off the rumored iWatch alongside the two new iPhones this month. They add that while the company could unveil the device next week, it might not make it immediately available for consumers to buy. This is in line with Apple’s past patterns with the iPad and the iPhone. The company unveiled the iPhone nearly six months before making it available for purchase and the iPad about two months before making it available for purchase.

The Cantor Fitzgerald team thinks this gap gives Apple the opportunity to build up plenty of free marketing buzz before the device becomes available. The analysts add that the gap also doesn’t eat into Apple’s current sales. However, they think it would be a good idea for the iWatch to be available for purchase in time for the holidays in December.

The analysts have a Buy rating and target price of $123 per share on Apple.

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