Just about every single big sell-side analyst has cut their price target on Apple, except for one.Brian White at Topeka Capital has remained a mega-bull on the company, despite the 30% collapse of the stock since September.
He has a $1,111 price target and he’s not backing down.
Most analysts are expressing concern about the long term viability of the iPhone business to grow, shrinking margins, a shift in product mix from high end to low end, and a lack of new product catalysts.
Not White. He says it’s full speed ahead. And since we’ve covered all those analysts cutting Apple, we figure we should give you the perspective of what is now a rare figure — a mega-bull on Apple.
So here it goes:
Our top large-cap stock pick in the IT Hardware & Networking group for 2013 is Apple. The negative sentiment around the stock has reached epic levels that we haven’t seen in recent memory and yet we believe the product portfolio has never been stronger. In August 2011, Steve Jobs indicated that “Apple’s brightest and most innovative days are ahead of it” and we agree. As such, we believe the risk-reward around Apple remains extremely attractive and the stock is now trading at just 6.8x (ex-cash) our CY13 EPS estimate.
And here are four key points from White:
- The supply chain cuts for the iPhone are not new news. “This is hardly a surprise given the order cuts across the rest of the supply chain in December and the excess orders placed by Apple with the panel makers to insure sufficient capacity.”
- Smartphones and tablets are still going to be huge this year. No company is in better shape to take advantage of the growth of mobile than Apple.
- Apple will strike a deal with China Mobile. Here’s how big that will be for Apple: “Keep in mind, China Mobile’s total wireless subscribers came in at 707.3 million in November and 3G subscribers (TD-SCDMA) reached 82.4 million. If every China Mobile wireless subscriber had an iPhone at the current ASP, this would represent ~$450 billion in sales for Apple. Clearly, it is not possible to sell to every subscriber but this calculation highlights the market opportunity for Apple with the carrier.”
- Apple television is coming, it will be amazing. “Over the next year or two, we believe Apple has the opportunity to reinvent the TV experience and Apple’s digital grid is tough to match. This will allow Apple to tap into an entirely new $100 billion market opportunity (more like $200 billion to $400 billion for Apple given a higher ASP), while further strengthening the Company’s digital grid and providing customers with a new TV experience.”
And now, if you want a more bearish take, here’s Pacific Crest, which thinks the iPhone business is peaked >
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