“Shares of Apple are off $1.83, or 0.4%, at $464.76, reversing earlier gains, as the Street digests the wave of 13F filings that yesterday showed large funds dumping the stock last quarter,” Tiernan Ray reports for Barron’s. “But some observers today were more interested debating the company’s product prospects, and gross margin implications.”

UBS’s Steve Milunovich “thinks Apple should do a cheaper iPhone, to increase its addressable market, [however] such a move would ‘produce only a few more dollars in EPS and be viewed as further incrementalism,'” Ray reports. ” Milunovich thinks Apple instead needs to press on with opening up new product categories. He cites recent remarks by former Apple employee Bruce Tognazzini about what the company could do with a watch, and concludes that Apple needs to get busy pre-empting competitors.”

Ray reports, “Also today, Evercore Partners’s Rob Cihra, who rates the stock Overweight, with a $675 price target, writes that you should expect a “low-cost iPhone” by the September time-frame, at perhaps $390 unsubsidized… ‘Our math allows Apple’s vertically-integrated business model to sustain gross margins still meaningfully higher than its peers even post the introduction of a new low-cost.'”

Much more in the full article here.