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Piper's Gene Munster details the reasons he sees Apple (AAPL -0.6%) reaching $1,000 over the...
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Friday, May 25, 2012, 10:03 AM ETPiper's Gene Munster details the reasons he sees Apple (AAPL -0.6%) reaching $1,000 over the next couple of years. Among them: a completely redesigned iPhone; an Apple TV set going for $1,500-$2,000; limited iPhone subsidy cuts (partly due to the low churn rates of iPhone users); continued margin strength; China demand; soaring tablet sales; and enterprise Mac/iOS adoption.
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This news story has 23 comments:
Counter argument?
Apple TV - $1,500 does not make sense given a 27" iMac with less tech specs selling for $1,700, Apple coming to market with a TV less than 27" would be a PR disaster, not one they can't recover from but certainly a 1-2 quarter downtrend as analysts await the sales figures
Enterprise - certainly Apple's Enterprise endeavors are threatened by the alleged W8 potential. I may be heavily invested in all things iDevices, but the buzz around the Nokia Lumia with W8 is substantial enough to warrant concern.
So of Gene's 7 upticks, two should be either removed or limited from any calculations of w/r to profit going forward.
Nonetheless, Starbucks is a good example of the paradigm shift needed at point of sale. Starbucks rolled out the app "reader" to facilitate iPhone as a wallet, how many retailers have the capacity to do that? I can see Safeway (Genuardi's East Coast), but not sure if Apple would bear the weight of such a maneuver, or the retailer bringing to market their own swipers ... great picture of our brave new "Mobile" world.
Not to mention that the Dividend Yield has actually increased since it was announced due to the inverse relationship between yield and price. Thereby making it more of a good valuation for those who seek dividends.
1. Is Gene Munster really right on subsidies
2. No Technology has reigned supreme for a long period of time
3. Patent issues
4. Complete Europe meltdown
5. China slowdown
6. Are families going to pay $1500 for a tv when they can get a 46" tv at Amazon for $500
7. Confidence for the leader is always the highest when they are on the top -- competition will exist in the future.
8. Stock market drop when multiples drop to single digits (remember 2008)
Believe me I am quite long Apple -- but there is a collective group think about this $1K event happening
The Pioneer Kuros plasma, which is no longer available, has one of the finest pictures in the industry. If aapl came out with one better, i would give the Pioneer plasma to the kids and buy the appl.
I was at the offices of Blue Ridge Capital in NY the other day. Sitting on the desk in many of the offices were huge apple computer monitors. They could have bought NEC or Samsung monitors for a few hundred bucks but they spent thousands on aapl monitors. They weren't just wasting money either, compare the picture quality and you'll understand why they opted for the aapl.
My point is that there are plenty of people who have the income who will consume the more expensive products if they offer a superior experience. Stevie Cohen owns nearly one billion dollars worth of art. Owns, among others, a 40 million dollar home in Greenwich and a 100 million dollar home in the city. There are plenty of others out there just like him. These guys have the purchasing power of most of the people in the US put together. On a bad year, Cohen makes 600 million a year. Thats 50 million dollars per month. Thus,It is very likely there will be lots of people who will buy a $2,000 apple tv.
By the way, why would you want to purchase that tv from amazon. If amazon has it for $500, you could find it elsewhere for much less onecall.com, underbid.com , restockit.com , newegg.com all offer far better deals and service. A great site called thefind.com lists vendors who offer the best prices. Amazon rarely offers the best prices and if you bought there, you have overpaid. Amazon has become a compilation of third party vendors who connive and bait & switch. I searched the internet yesterday for an item i needed. Newegg had it for the cheapest at $4.92 plus shipping of $3.22. Amazon had it for $7.95 plus shipping of $5.95. Why in god's name would anybody shop at amazon. Then I found a place that had it for sale at $1.95. I clicked on the vendor which took me back to the Amazon site. I went through their checkout process only to find that in tiny print at the bottom they said that the item was refurbished - on top of that, they wanted $15.95 for shipping. As people become smarter, and more quality vendors offering competitive pricing emerge, people will become tired of the amazon games. Bezos is a master manipulator and it is only a matter of time before he will have to have to start selling some of those space shuttles in his collection as investors come to the realization on the true amazon story.
@jkinian, I agree with you re the collective group think, but there's two groups even there: those that agree on the fundamentals given new product cycles and the roller coaster earnings/stock price reality given the Christmas season uptake (Q4); and, those who are truly exuberant retail investors (we won't talk about the latter, Ha). For the former, who examine Year over Year data, there is no rational reason to not expect AAPL to edge up Q3 and blow away estimates Q4.
Your #5 China slowdown seems not to be supported by the abundance of news and Cook's own trip to smooze. Somethings happening to move the iPhone to the 700M on the other telecom. Even if there's just a rumor or announcement of something happening in 2013, that will certainly cause a few million to postpone upgrades.
Your #2, 6 & 7 are all contingent upon new products entering the field, with the amount of $ spent on R&D, and Apple's consistent history and predictability w/r to product cycles there should be some sort of refresh across the board by the holidays.
Clearly there is competition with smartphone products individually, and maybe a tablet or two, I totally agree with you on that threat. However, there is no competition w/r to the Apple ecosystem, millions will buy the latest Apple product to add value to their ecosystem, that is a 3rd or 4th Apple device, and we haven't even talked China yet, if . The only nearest competitor is the Nokia/MS smartphone/tablet, also slated for the holidays. Here's the thing however, Apple is beat by like 1% in China and that on the competing telecom, Apple's share to start with was only a minuscule, 6%! Even if Apple ONLY doubled in China to 12%, there'd be the same profit increase as in Q1 2012, that's bankable.
Lastly, I expect a bearish Q1 2013 price target, announced January 2014 to be $850 not $1,000. That's just based on a conservative trend line for 2009-current, yes? But even so, I'm not adding to my position at these prices, Ha, no way! Bottom line I have some disbelief too, but the fundamentals do suggest the stock moving, but not with this attention level towards $1K.
All that said, lately it has not moved the stock price. There are many retail traders that are in quite a lot of hurt right now as they are still long aapl over 600 and at present, the stock has not responded to any upgrades or good news. Based on fundamentals and the tremendous growth potential for the new iPhone and the iPad, the stock should be well north of $700 by now. There are several powerful hedge guys the buy in collusion. They breakfast together, golf together, attend Ferrari outings together, enjoy drinks poolside in East Hampton together. They decide together to get into a stock in a big way and it runs from 300 to 644 in months. Conversely, they also get out of their position together and the stock runs from 644 to 522.18 in short order. This is the way the game is played and one can sit there and pontificate about nonsense or learn how the game is played and make a very nice living doing so. On 5/18 when aapl went from 543 to 522 intraday, money was actually coming into the stock as it went down. If you knew what to look for and took a position in it. Look what happened on the next trading day on 5/21. You could have made a 20-40 point profit. Recognizing this on my charts, I took a small position on that Fri of 500 shares at the close at 530.27. At the opening gap i added another 500 at 535 and another 500 shares at 544 into the continued days rise. I sold all 1500 shares at the close for 560.38. While I am no Stevie Cohen, that was a nice days pay. Now sometimes I even ignore my own discipline and the patterns I am recognizing because i let the fundamentals of aapl cloud my judgment over the technicals. In my trading account i still own 1,000 aapl at 594. The technicals were telling me to sell and take my profit but I was tired of trading that day and let the wonderful appl products lull me into complacency. Got my head handed to me. Until the hedge guys decide to run aapl back up, aapl will meander. Bottom line is one can make a case for the fundamentals etc etc, but the big players moving the stock in the short term enter and exit at certain levels based on technicals, recognize that, ignore all the other nonsensical noise and talking heads and you can play the trading game very successfully. If you are an investor, on the other hand, sadly, you must wait until some type of world tragedy to be able to pick up good stocks at bargain prices to make sizable returns. During 11/08-3/09 i built a portfolio of 1,000 shares of each of the following: axp @ $10/share, aapl @ 83, msft @15, joy @ 14 and lastly ibm @70. An investment of $192k has turned into a handsome return. While I would gladly trade in & out of ibm or aapl to make daily income and i believe aapl will trade to the 654 range, i would not invest at these levels regardless of how brilliant a company is. Not that they can't go higher, but for me , the downside risk from here would outweigh the investment potential. There is no money to be made getting to the party early, wait on the sidelines until some devastating news pummels the markets.
Also, when are you going to start writing blogs on SA to let people like me know "what to look for"?
Near term catalysts to push it above the $570 and $625 resistance levels are as follows:
1) The fact they are almost the only tech company that is truly dominating, has steller growth globally (don't worry about Europe, they will still buy phones and computers even if the southern Euro governments are deep in debt), has wiped out whole groups of competitors (poor HP, RIMM, Sony, Nokia etc. etc)
2) Best brand loyalty in the world
3) Earnings are fantastic and cash hoard is humongus
4) Low taxes and labor costs seem sustainable
5) Excellent people at the helm even without Jobs
6) Apple TV announcement sooner than later, maybe June 11
7) Run up into new iPhone release bound to be colossal, as well as other new products and ability to beat back Amazon, so Samsung is the only real competitor and that on the lower end
8) Switch by security-conscious enterprises from Blackberry to Apple
9) Major positive influence in Hollywood amongst studios and networks, doesn't hurt Disney CEO is on their board. Hollywood will be Apple's whore and they can afford to pay for content.
10) China huge growth bound to continue,
Put it all together and what the hell is the stock doing going down today? technical traders seem to be in charge, for now, but anyone who shorts or sells Apple at these levels has to be out of their mind. I say $750 this year, $850 near and $950 the year after more or less.