Apple (AAPL) stock dropped by around 2.5% over the Thanksgiving holiday between Wednesday and black Friday. The drop does not surprise top blogger Bill Maurer for Seeking Alpha, who had already been writing about a 4% drop from Monday, November 20th following another Apple iPhone production cut report. Though skies are looking gray, Maurer says “Apple’s world is not ending anytime soon.”
“This is not the same company that lost a third of its value a few years ago when the iPhone 6S line did not pan out as hoped. More expensive products these days can soften the blow from unit sales, and Apple is generating more recurring service revenues than ever before. In fact, services numbers will be even higher moving forward as Apple has made an accounting change related to how products/services are reported,” Maurer explains.
The blogger doesn’t ignore that the most recent earnings report from Apple “wasn’t great” as he calls it. However, he notes a large part of the downbeat is due to a trade war occurring between the U.S. and China. If an agreement comes out of it, Apple could rise, along with other tech sectors of the marketplace, according to Maurer. He also reminds that Apple still hasn’t penetrated the Indian market and that if products become available in the country, there’s huge opportunity for sales there. A last note on this – Maurer says reported results are skewed due to foreign exchange rates impacting the actual dollar amount.
Maurer has a slew of creative suggestions for the tech giant on how it could be more profitable. He starts with the idea that creating a lower-priced iPhone ($349) or a “drummed-down” MacBook for $799 or an iPad mini for $249 or $199 — could sell millions of units per year and bring in much more revenue.
“Apple has dominated the premium space for its products, but a simple move down the price ladder a little could mean tens of billions in extra revenues a year,” Maurer explained. “Of course, there also are major opportunities down the line if Apple launches smart glasses or were to ever enter the vehicle business.”
Maurer predicts EPS will rise at an even faster rate moving forward, due to buyback: “The recent drop in the stock means the buyback is even more powerful, and investors buying now receive a higher dividend yield,” Maurer says.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star blogger Bill Maurer has a yearly average return of 7.6% and a 55% success rate. Maurer has a 5% average return when recommending AAPL, and is ranked #69 out of 6,569 bloggers.
Maurer concludes by explaining that even though the media is making Apple look like it’s in a bad position, it is not the case. The bull explains how even if the expensive iPhones don’t do well in the market, there are other “levers” (as he calls them) that Apple can pull – such as new products and services in the coming years. Maurer also reminds investors that the Apple name still boasts the best capital return plan in the marketplace.
The Street consensus for AAPL shows the stock as a Moderate Buy, with a consensus price target of $236.27, which shows a 37% upside from where the stock is currently trading. TipRanks surveyed 35 analysts who have been researching AAPL stock. 21 are bullish, 13 are sidelined and 1 is bearish.