Apple (AAPL) Shareholders Should Not Fret - Analyst
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Price: $257.46 -1.09%
Rating Summary:
45 Buy, 28 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
Rating Summary:
45 Buy, 28 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Apple (Nasdaq: AAPL) is continuing its recent slow slide lower, but at least one analyst is recommending investors continue buying as concerns fade and catalyst emerge.
Analysts at Credit Suisse reiterated their Outperform rating and $500 price target on Apple Monday saying, "short-term issues (primarily concerns over weak iPad units) will attenuate in coming quarters and long term concerns fade as upcoming catalysts and results demonstrate the strength of the company's opportunity and business model."
Credit Suisse one-by-one addresses recent market concerns:
1: iPad Demand Issues: "We don't think so. The company has highlighted that iPad has seen 'mother of all backlogs' and seems to be promising substantial volume growth near term (note we assume iPad volumes of 8mn in C2Q11). Longer term, we remain of the view that the tablet market will rise to 300mn units and Apple can retain 50% market share at least."
2. iPhone volumes reaching saturation: "We demonstrate that even with the existing high-end focus, Apple can see smartphone volumes rise to 85mn/120mn in CY11/CY12 driven by i) smartphone segment growth of 52%/32% yoy, ii) additional carrier expansion in both North America and globally (CDMA carriers) and iii) share gains at existing customers (e.g. Telefonica)."
3. Apple too big and aren't shares over-owned: "Despite reaching 2.6% of S&P, we highlight this should not be a barrier for outperformance (the 5% level has been more of a ceiling). Compared with companies that have reached similar levels of the S&P, Apple's P/E is 50% lower. In addition, Apple's current strategy simultaneously addresses several areas of consumer spend (telecoms, PCs and CE), making its opportunity set unique and significant."
4. Steve Jobs' health: "While this is a valid concern in the long term, We believe Apple's deep bench has shown robust execution and can continue to leverage the current business model/portfolio to add $10 of extra EPS per year longer term, through: i) launch of a low-end iPhone, ii) a greater push towards EM distribution and iii) a more concerted corporate push."
5. Cash pile: "We don't believe that M&A or organic requirements are that sizeable versus the cash pile, hence we demonstrate that the company could institute a 5% yielding dividend and even in a conservative EPS scenario, could still have around $100bn in net cash five years from now."
Analysts at Credit Suisse reiterated their Outperform rating and $500 price target on Apple Monday saying, "short-term issues (primarily concerns over weak iPad units) will attenuate in coming quarters and long term concerns fade as upcoming catalysts and results demonstrate the strength of the company's opportunity and business model."
Credit Suisse one-by-one addresses recent market concerns:
1: iPad Demand Issues: "We don't think so. The company has highlighted that iPad has seen 'mother of all backlogs' and seems to be promising substantial volume growth near term (note we assume iPad volumes of 8mn in C2Q11). Longer term, we remain of the view that the tablet market will rise to 300mn units and Apple can retain 50% market share at least."
2. iPhone volumes reaching saturation: "We demonstrate that even with the existing high-end focus, Apple can see smartphone volumes rise to 85mn/120mn in CY11/CY12 driven by i) smartphone segment growth of 52%/32% yoy, ii) additional carrier expansion in both North America and globally (CDMA carriers) and iii) share gains at existing customers (e.g. Telefonica)."
3. Apple too big and aren't shares over-owned: "Despite reaching 2.6% of S&P, we highlight this should not be a barrier for outperformance (the 5% level has been more of a ceiling). Compared with companies that have reached similar levels of the S&P, Apple's P/E is 50% lower. In addition, Apple's current strategy simultaneously addresses several areas of consumer spend (telecoms, PCs and CE), making its opportunity set unique and significant."
4. Steve Jobs' health: "While this is a valid concern in the long term, We believe Apple's deep bench has shown robust execution and can continue to leverage the current business model/portfolio to add $10 of extra EPS per year longer term, through: i) launch of a low-end iPhone, ii) a greater push towards EM distribution and iii) a more concerted corporate push."
5. Cash pile: "We don't believe that M&A or organic requirements are that sizeable versus the cash pile, hence we demonstrate that the company could institute a 5% yielding dividend and even in a conservative EPS scenario, could still have around $100bn in net cash five years from now."
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