With Samsung going heavy on the launch of the Galaxy IV today, aiming right at the beating heart of the�suddenly defensive�boys from Cupertino Apple Inc. could use a buddy. The stock, which crested over $700 back in September, is down to about $430 amid a relentless pounding.
BTIG’s Walter Piecyk stepped into that breech, and upgraded the stock this morning to buy, slapping a $540 price target on it. Basically, Piecyk still believes in the company’s potential to make magical and revolutionary products.
The list of Apple’s troubles is well known, Piecyk notes: consensus beats aren’t a given anymore; Samsung’s got that splashy launch party today, management can’t make up its mind about what to do with the cash hoard ($137 billion and growing), consensus EPS estimates for the current fiscal year are dropping and growth looks minimal.
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Sure, most companies would love to have Apple’s troubles — it posted a $13 billion profit in its last quarter — but apparently that isn’t buying much love these days.
“What better time to upgrade the stock,” he asks. “We once again believe that investors need to take a deep breath during the rapid drop in the stock and leading into what could be a difficult quarterly to take a moment to consider the various and significant revenue and product opportunities available to the company, the lapsing of the tighter upgrade polices in the United States, its most important market, and the investment opportunities of $150 billion of cash.”
The upgrade is certainly somewhat speculative: Piecyk acknowledges it’s based on the potential of “products and services that have not yet been announced and more importantly, an expectation that the management team will actually pursue them.”
He expects the company will introduce a cheaper version of the iPhone, which could add $11 billion to fiscal 2014 revenue, even after accounting for some cannibalization of the higher priced models.
He also put into his fiscal 2014 revenue estimate an extra $5 billion for a new product, one that hasn’t even been announced nor does he hazard a guess as to what it is. “How is that for giving the management team the benefit of the doubt that many believe has been lacking from the investment community?”
George Stahl stopped by the Markets Hub this morning to talk about Apple:
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