Apple to experience mixed fortunes in 2016?
Fri 22 Jan 2016
A recent report from analyst Piper Jaffray has said that Apple’s forthcoming quarterly earnings review could bring a gloomy forecast.
Gene Munster of Piper Jaffray claimed that sales of the Apple iPhone could witness the first year-on-year decline in the report which is due next week. In addition to the low demand for the current iPhone 6S model, the negative Wall Street reaction (Apple shares have been sent 28% from a 52 week high) has added further concern.
Munster says that Apple stock is presently trading at 9.7 times its estimated calendar 2017 EPS, which is as low as the stock has traded in the past decade.
The forthcoming iPhone 7 has been met with mixed feedback with regards to the future. Analyst firm Raymond James has argued that while growth is expected in 2017, a “major iPhone 7 bounce-back” is not expected. The iPhone 7 is expected to boast a new design alongside a set of new functions, hardware and gadgets.
Despite his less than forthcoming predictions, Gene Munster has, however, said that the iPhone 7 could swing up Apple stock by this September when it is due to début.
Munster recalls a similar situation that occurred back in April 2013. In the wake of the “disappointing” iPhone 5 launch, slow, single-digit iPhone unit growth was delivered along with similarly sluggish overall revenue growth. However, the year after saw a considerable turnaround as Apple shares were up 50%. And in 2015, stock was up by 120%.
Munster believes that the pattern could be repeated again as he says that shares of AAPL could achieve upside of more than 50% from the current levels by the time that the iPhone is launched in September. He added that investors normally bid up Apple’s multiple in the six months that lead up to the iPhone launches – as was the case with three out of the last four iPhone launches.