Apple Inc (NASDAQ:AAPL) has been battered and beaten over the last several weeks, despite the launch of at least three new products and a new operating system (iOS 6) and some record sales numbers. While here have been some mixed reviews about the stock and the company, one analyst went on CNBC recently to talk about Apple Inc (NASDAQ:AAPL) actually being oversold, setting a price target at $670.
Andy Hargreaves, senior research analyst at Pacific Crest Securities, spoke about Apple Inc (NASDAQ:AAPL) on CNBC’s “Squawk Box” program addressing the issues and upside about Apple (AAPL). “There are obviously some very real issues here in terms of slowing growth, especially post the iPhone 5 product cycle,” Hargreaves said, “and perhaps we’ve seen some limits on how high those gross margins can go, which means that gross profit won’t grow like it has in the past, but we’ve accounted for a lot of that at this point. It’s trading right now at 10.5 times my 2013 number, and with the amount of cash these guys have on their balance sheet right now, that is pretty darn cheap.”
Hargreaves went on to talk about the history of success for Apple Inc (NASDAQ:AAPL), but when pressed about the current momentum that seems to run counter to the new product roll-outs and sales numbers, Hargreaves did admit to this downtrend as perhaps being a “tell” for the stock’s future. “The company is selling every product that it’s making,” he said, “but I think the real question being alluded to here is, is there a market opportunity that is just as big as the smartphone and the tablet have been?” Hargreaves went on to say that the idea isn’t whether Apple Inc (NASDAQ:AAPL) has lost the ability to do what it has always done, but rather that the markets may have started to dry up for a company that is so large that it would need another large market in order to continue to post similar growth numbers, and he didn’t see that market out there.
“There is still opportunity to grow within the iPhone and iPad product lines, but not at the pace that we’ve seen in the last few years,” Hargreaves said. “It’s pretty much saturated at the high-end of the smartphone market in developed countries. Which means there are incremental opportunities here and incremental opportunities in emerging markets, but not like we’ve seen.”
Hargreaves summarized by stating his $670 price target on Apple Inc (NASDAQ:AAPL) stock one year from now, stating that “the stock has been oversold, and at the end of the day, when you look at the profit contributions of the iPhone and iPad … when we look at where the stock is now and we had that price target, we’d be buyers.” So would this mean that investors like billionaire Julian Robertson of Tiger Management should strengthen his position at this point? Would you do it if you had the chance?