Overall, Sacconaghi is very positive on Apple, though he warns that the company’s growth rate is going to slow to single digits in 2015.
He’s calling for sales growth to go from 22% for fiscal 2013 to 15% for fiscal 2014 to 8% for fiscal 2015.
He is not modelling in any mystery products like a TV that could boost sales.
As bad as it sounds, it’s not like investors have really been treating Apple like a growth stock lately. Its PE is at 12. So, this is kind of priced into the stock, as they say.
That’s the bad news. Let’s look at the good news from Sacconaghi.
By 2015, even with slow growth, Apple will have $49 billion free cash flow. The tablet market is “a rocket…an absolute juggernaut,” and if you were to spin out Apple’s iPad business alone, it would be the 11th biggest U.S. tech company with annual sales of $32 billion today.
He says that Apple has “option” value, which means there’s a potential for it to release a miracle product like a television or a cheap iPhone that would send earnings soaring and thus the stock, too.
Considering how universally bullish the world has been on Apple, reducing it to “option” value now is a bit of an insult.