Is Apple Inc. (AAPL) Really Worth as Much as Bill Miller Said?


In a recent program on CNBC, several experts from the investment world discussed about Apple Inc. (NASDAQ:AAPL), and the potential that its stock carry in the short run. Yesterday we discussed Bill Miller‘s intervention on the same channel, who said that Apple’s stock might be worth between $700 and $750. This time, Tom Forte of Telsey Advisory Group, and Alex Gauna of JMP Securities discussed whether Bill Miller is right in his predictions regarding Apple Inc. (NASDAQ:AAPL)’s stock price.

apple inc (nasdaq:AAPL)

Mr. Forte said that the next 12 months will be good for Apple Inc. (NASDAQ:AAPL)’s stock. The company is planning to launch the new version of its main product, the iPhone, which will probably have a larger screen size. The analyst considers that this product has the potential to create a “pent up demand” similar to what happened two years ago, when Apple rolled out their first 4G iPhone.

Incrementaly better, in this case, a larger screen size I think could be enough to draw significant renewal demand to the iPhone later this year,” Mr. Forte added.

At the same time, Mr. Gauna seems to be not so optimistic regarding the future of Apple Inc. (NASDAQ:AAPL)’s share price. Even though he also stands by the idea that Apple will launch an iPhone with a bigger screen size, he considers that this move might be made a little bit too late for the company, who could have done it earlier. In the meantime, the competition in the smartphone market got stronger. In addition he provided some opinions regarding other Apple products that are expected to be launched soon.

“We think we are going to get an iWatch. We think there is going to be something in terms of refreshing Apple TV, we are not exactly sure what. But the problem is that it’s not happening faster and they are ceding the initiative to a lot of their rivals out there,” the analyst of JMP Securities said.

Moreover, Gauna considers that even though Apple Inc. (NASDAQ:AAPL) is still a leader in terms of hardware, it is fallen behind in terms of software and in terms of “igniting the imagination.”

When asked whether innovation is still a key factor when speaking about Apple Inc. (NASDAQ:AAPL), Mr. Gauna said that inovation is what drives the increase in earnings.

“[…] we know what happens when innovation stagnates with hardware companies. The margins go away first, and then the growth goes away and Apple, as a stock, has a multiple that bakes in growth for this story. So, with most of the growth in iPhones now expected to come out of China, and that being a hyper competitive and hyper cost sensitive market, I think they are going to need something in terms of the new product category, the new usage category, software, something that sets them apart, so that they can sustain their gross margins,” Mr. Gauna concluded.

The full video is available below: