As its shares rebound, Apple seen as ready to 'change the narrative'
Shares of Apple have continued to rise since mid-April, setting the stage for the company to "change the narrative" beginning with WWDC in June, one analyst believes.
Ben A. Reitzes of Barclays increased his AAPL price target from $465 to $525 on Monday, citing three key reasons. In particular, he believes Apple will get investors and consumers at large talking about new products again, starting with its annual Worldwide Developers Conference, which kicks off June 10.
Reitzes expects Apple to announce new software, services and Macs at WWDC, followed by another event in September, where the company is expected to announce a new iPhone, as well as potentially unveil updated iPads.
"With these events, combined with improving builds in the supply chain, we believe investors will become less concerned with the September product transition quarter and start to anticipate a large holiday quarter," he said.
Beyond the ramp up for new products, Reitzes said he feels better about Apple's gross margins. The analyst had initially feared that if Apple were to release a low-cost iPhone, it would severely degrade the company's margins, but he has since cooled on the possibility of a "worst-case" scenario in 2014.
Finally, Reitzes said he "didn't fully appreciate" the importance of Apple's recently announced capital reinvestment program, which will see the company spend $100 billion through 2015 on share buybacks and a larger quarterly dividend.
"Apple needed this, especially for management credibility," he said. "After seeing how buybacks have helped secularly challenged tech stocks from Seagate to even Lexmark, we simply believe that this market likes buybacks ??even in tech."
Ben A. Reitzes of Barclays increased his AAPL price target from $465 to $525 on Monday, citing three key reasons. In particular, he believes Apple will get investors and consumers at large talking about new products again, starting with its annual Worldwide Developers Conference, which kicks off June 10.
Reitzes expects Apple to announce new software, services and Macs at WWDC, followed by another event in September, where the company is expected to announce a new iPhone, as well as potentially unveil updated iPads.
"With these events, combined with improving builds in the supply chain, we believe investors will become less concerned with the September product transition quarter and start to anticipate a large holiday quarter," he said.
Beyond the ramp up for new products, Reitzes said he feels better about Apple's gross margins. The analyst had initially feared that if Apple were to release a low-cost iPhone, it would severely degrade the company's margins, but he has since cooled on the possibility of a "worst-case" scenario in 2014.
Finally, Reitzes said he "didn't fully appreciate" the importance of Apple's recently announced capital reinvestment program, which will see the company spend $100 billion through 2015 on share buybacks and a larger quarterly dividend.
"Apple needed this, especially for management credibility," he said. "After seeing how buybacks have helped secularly challenged tech stocks from Seagate to even Lexmark, we simply believe that this market likes buybacks ??even in tech."
Comments
Stock could be on the rise....finally an analyst that is predicting something positive for Apple.
Apple jumped to #6 on Forbes 500 based on revenue...
http://money.cnn.com/magazines/fortune/fortune500/2013/snapshots/670.html?iid=F500_sp_list
Of course he didn't understand the value of the stock buyback... It lessens the ability of him and his ilk to affect the price!
All other products have simply been spec bumps.
With a (hopefully) large iOS refresh amongst other things the last 3 months or so of this year may actually make Apple exciting again.
Originally Posted by saarek
I think that part of the problem with Apples share price has been the rather lack of an exciting product since the 15" retina MacBook Pro.
No, that's not at all the problem.
The tech press does on occasion call them on this. Except of course, the two sectors are joined at the hip when it comes to stories about Apple.
2013 is not going to be an exciting year for releases. Not until Q4, and even if that.
To understand why you need to look at Tim Cook. Cook delivers, he's always delivered, it's the reason Steve anointed him as the successor, anyone associated with Apple knows this. He's taken an approach which has not shifted the vision Jobs had in motion but actually focussed it.
And as a supply guy he has focussed on workflows and systems. He cleared out Forstall, a disruptive element in management, put Ives, the principal creative in the company, center stage, and trimmed management. The end of 2012 saw a flurry of product releases, Cook clearing the decks in terms of active projects.
There is no one more aware of him being Jobs successor than Cook himself. My reading is he wants to take this well oiled machine, which is geared now to releasing gradual improvements to a range of devices, somewhere new. And he's given himself some time to do that.
Ives now oversees both hardware (mac and iOS) and software (mac and iOS). This is a major development in terms of what end users will get to experience. The clearing of the decks indicates an open brief to re-invent. Likely as not, we won't see the fruits of this till next year.
A long dearth of stories the market and tech press will likely hail as an ongoing train wreck.
Neither will they like what Apple will likely do in the interim, steady slow incremental updates, seeing dullness where the public see reliability and familiarity. Apple learned by studying Microsoft, they've played this game before.
The real questions to ask of Apple are where are the weaknesses in this new structure? Possible areas of concern are the lack of clear competing teams in this new structure, there was always the potential that a particular project could redefine the future of the company (the original Mac, the iPhone) against other teams efforts. If all the teams have one creative overseer maybe, just maybe, that's a weak spot.
Quote:
Originally Posted by Tommy Weir
To understand why you need to look at Tim Cook. Cook delivers, he's always delivered, it's the reason Steve anointed him as the successor, anyone associated with Apple knows this. He's taken an approach which has not shifted the vision Jobs had in motion but actually focussed it.
Cook didn't go into the job with the attitude "well, now it's MY company, or MY turn to do things MY way. A refreshing change from the way most CEOs operate. And unlike a lot of corporate America, he's not interested in driving the company into a ditch just so he can cash out.
Based on the market's reaction, it would appear that the major problem was that Apple was sitting on its billions, instead of spending that money on shareholders. Now that they raised the dividend and offered to spend more on buybacks, things are looking up (so far). New products, earnings, iPhone market share etc all seem less significant. Not sure I agree, as I think the massive drop in share price was dumb to begin with and made no sense, but the reaction from Tim Cook's recent actions is fairly obvious.
Quote:
Originally Posted by saarek
I think that part of the problem with Apples share price has been the rather lack of an exciting product since the 15" retina MacBook Pro.
All other products have simply been spec bumps.
With a (hopefully) large iOS refresh amongst other things the last 3 months or so of this year may actually make Apple exciting again.
Add to that the Apple Maps flop, NYTimes Pulitzer prize Apple bashing and the perception that Tim Cook needs his own Tim Cook to fly to China to handle the supply end of things, etc.
The iPhone5 was probably the least exciting of any iPhone ever. Many have yet to upgrade from the practically perfect 4S- even Cook was caught lugging around a 4S.
Quote:
Originally Posted by Tommy Weir
Another analyst decides to take his investors out for a spin.
The tech press does on occasion call them on this.
Philip Elmer de Witt (and maybe John Gruber) are the only ones I know of who call out the analysts.
Actually, we were saying the stock would rebound (or at least a floor would be put in place) if AAPL would return more of its cash horde to shareholders. And that was exactly what AAPL did.
Yep. That must be the reason why it's the largest selling phone of all time.
Oh boy..... What do we have here.....
Quote:
Originally Posted by anantksundaram
Yep. That must be the reason why it's the largest selling phone of all time.
Oh boy..... What do we have here.....
ikool was trolling, but the introduction of the 4 form with retina was IMO more exiting than the 5. They should bring it back with updated internals and slightly thinner/lighter as an alternative model. I like the 3.5" display and glass slab look and feel.
The dividend yield + buy back = a nice return, somewhere near 5% at 500$. With the return to investors Apple has floor the stock. After that its must maintain its EPS or increase it with cycles or new products.
No I wasn't - in fact you more or less cemented my point.
Quote:
Originally Posted by anantksundaram
Yep. That must be the reason why it's the largest selling phone of all time.
Oh boy..... What do we have here.....
The iPhone 5 has sold nowhere near 250 million units. So what do we have there?
Originally Posted by garbage
The iPhone 5 has sold nowhere near 250 million units. So what do we have there?
Okay, so what phone sold 249,999,999 units?!