Despite a soured investor sentiment that has sent Apple’s (AAPL) share price plummeting 30% over the past four months, one industry watcher believes Steve Jobs’ comment from August 2011 still holds true: “Apple’s brightest and most innovative days are ahead of it.” Topeka Capital Markets analyst Brian White on Wednesday sent a note to investors reiterating his Buy rating on Apple stock with an industry-topping $1,111 12-month price target. The analyst believes Apple’s portfolio has never been stronger than it is today, and big catalysts including an iPhone deal with China Mobile and a full-scale attack on the TV industry will help convince investors that Apple’s lead isn’t going anywhere in the coming years.
“The negative sentiment around the stock has reached epic levels that we haven’t seen in recent memory and yet we believe the product portfolio has never been stronger,” White wrote in his research note. “In August 2011, Steve Jobs indicated that ‘Apple’s brightest and most innovative days are ahead of it’ and we agree. As such, we believe the risk-reward around Apple remains extremely attractive and the stock is now trading at just 6.8x (ex-cash) our CY13 EPS estimate.”
He continued, “The negative Apple story of the week is around major reductions in orders with the LCD panel makers; however, this is hardly a surprise given the order cuts across the rest of the supply chain in December and the excess orders placed by Apple with the panel makers to insure sufficient capacity. With the stock trading at just 6.8x (ex-cash) our CY13 EPS projection, net cash at 26% of the current market cap (or FY15E at over 50%) and the stock down 31% from the peak in September, we believe investors that can look through this noise will be rewarded in 2013.”
Apple’s huge profit leads in the smartphone and tablet markets position the company very well in 2013 according to White, and an imminent deal to launch the iPhone with China Mobile, the world’s largest carrier, will be a major catalyst later this year.
The analyst also says TV products unveiled at CES 2013 are decidedly unimpressive, and Apple will “eventually reinvent the TV experience.”
“Over the next year or two, we believe Apple has the opportunity to reinvent the TV experience and Apple’s digital grid is tough to match,” White wrote. “This will allow Apple to tap into an entirely new $100 billion market opportunity (more like $200 billion to $400 billion for Apple given a higher ASP), while further strengthening the Company’s digital grid and providing customers with a new TV experience.”