“For almost two years, every market participant (I won’t say expert) has had an opinion of what was wrong with Apple (AAPL),” Wall Street Playbook writes via Seeking Alpha. “Apple was everyone’s punching bag. Until last week happened.”
“All of a sudden, following Apple’s blowout quarter, everyone is proclaiming how they’ve been right about Apple. The company’s future is now ‘favorable.’ But consider, even when things appeared gloomy, Apple had never missed its own estimates,” WSP writes. “In fact, for -now – four consecutive quarters, Tim Cook has met or beaten the midpoint of his guidance. But even with Apple’s recent surge, the stock remains considerably undervalued to both the company’s near term and long-term potential.”
“Beyond the company increasing the size of its capital return program by $30 billion, Apple has promised it will enter a new product category this year. The rumors center around the iWatch,” WSP writes. “As it stands, the wearable tech industry (watches) has gross margins ranging from 50% to 60%, according to Bloomberg. This fits right into Apple’s core. And assuming that Apple can achieve 10% to 15% market share, which is conservative, this can immediately become a $10 billion revenue stream… From my vantage point, there is still potentially 30% upside, which places the stock right around $750, $27 shy of Apple’s highest price target of $777. This means 7:1 split-adjusted price target of $107.”
Read more in the full article here.