“The iPhone upgrade announcement makes things interesting for investors, especially as iPhone sales accounted for 56% of Apple’s revenue last year,” Alexander Eule reports for Barron’s.
“Apple’s shares finished the week up 4.5%, to $114.21, although the stock is still down 14% from its summer peak, making a cheap stock even more compelling,” Eule reports. “If the leasing program proves to be popular, Apple could soar 50% in the coming year.”
“At its current price, Apple trades for 11.8 times earnings projections for the next 12 months. Back out the company’s $150 billion in net cash, and the forward multiple drops to just 9.1,” Eule reports. “The leasing program attacks the primary bear case on Apple—slowing iPhone growth. Amit Daryanani, an analyst with RBC Capital Markets, estimates that the upgrade cycle for iPhones has stretched to 26 months from 22 months in 2013. After getting a jump-start from the larger iPhone 6 this year, analysts expect iPhone sales to flatline at 235 million units in 2016. The iPhone Upgrade Program, Apple’s official name, has the potential to reverse the trend, and more. ‘You essentially create a certain group of your user base that is going to be on a 12-month upgrade cycle,’ Daryanani says. The big question is how large that group becomes.”
Read more in the full article here.
MacDailyNews Take: That’d be nice, wouldn’t it, AAPL shareholders?
[Thanks to MacDailyNews Reader “Bill” for the heads up.]