A ‘Sector Perform’ rating for Apple Inc. (NASDAQ:AAPL) isn’t what most investors would expect after the company’s hyped media event this week. While being interviewed on CNBC, Andy Hargreaves of Pacific Crest explained why his investment bank, which specialises in technological companies doesn’t see Apple heading for the skies with its new products.
While establishing his reasoning for Apple Inc. (NASDAQ:AAPL)’s stagnant performance uptill 2016 Hargreaves started by saying that iPhone was by far the most significant product at the launch. He said that it had the most potential in terms of boosting the company’s top line. However he didn’t see how Apple could continue to increase users and counter the deceleration with iPhone 6 till 2016.
“One of the things that we have seen over the few couple of years is the decline in the user growth for the iPhone. So, we have a couple of years of the trend and you can kind of pencil that forward and it becomes a big issue if you think that they are going to gain a lot of share with the iPhone 6 cycle because it accelerates at the time to saturation,” said Hargreaves.
Although Apple Inc. (NASDAQ:AAPL) is trying to diversify its revenues by hooking up people to their ecosystem through their services such as Apple Pay and Smart Home, Hargreaves remained skeptical to their contribution in Apple Inc. (NASDAQ:AAPL)’s top line. He stated that, unless the company significantly outperforms expectations in terms of iPhone or iWatch sales, Apple Inc. (NASDAQ:AAPL) is going to reach saturation within the next six months and face declining multiples.