Piper Jaffray’s Gene Munster, after serving several years as a staunch Apple Inc. (NASDAQ:AAPL) bull, made his last prediction on the stock Friday. The analyst, as usual made a plea to buy Apple’s stock.
Munster – still very bullish on Apple
Munster reiterated a $155 12-month price target on the stock, suggesting an upside of 30%. He initiated coverage on the iPhone maker in 2004, and has been overweight on it since then. FactSet – in a survey of roughly 40 analysts – found that Munster’s target is one of the most bullish – $25 above the average target of $130.
Munster has been known for outlandish reports and predictions on Apple Inc. (NASDAQ:AAPL) including a prediction that the firm would introduce a smart TV. He now is opening a venture-capital shop for which he has to leave his role as a Piper Jaffray analyst.
In January, Munster had a price target as high as $179, but due to continued decline in the iPhone sales, he had to reduce that sharply. However, he still firmly believes in Apple’s long-term growth story. On Friday, he specifically pointed to a data showing a growing installed base of outdated phones, which he believes will come due for an upgrade in 2017.
In the goodbye note, he wrote, “We continue to think the iPhone 7 will have better unit growth than the Street for March and June and also believe that next year’s 10th anniversary device will be compelling enough to sustain high single-digit to low double-digit unit growth.”
Services hold the key for Apple
Munster and his partner Doug Clinton made an assessment of the efforts Apple Inc. (NASDAQ:AAPL) is making to convince investors that the recurring revenue from services like iTunes music and iCloud online storage will push the stock up.
“Since I started covering Apple in 2004, the two core concerns from investors have always been unit growth and innovation. Not much has changed since 2004 despite the evolution of the business from PC to mobile and not much will change if they are not successful in making Services a bigger part of the story,” the analyst noted.
Munster is confident regarding Apple’s growth prospects of iPhone products despite flat overall smartphone demand. This past fiscal year, Apple reported its first ever annual decline in the iPhone sales. He pointed to a data showing a ‘growing wave of three-year-old or older iPhones.’ It will expectedly reach 300m units during the iPhone cycle next year.
People hold on to their phones longer. For this reason, smartphone upgrade cycles have been lengthening industry-wide, leading to a world-wide deceleration in the sales. IDC predicts that worldwide smartphone shipment growth will be 0.6% in 2016 – a sharp decline from 10.4% last year.
On Friday, Apple shares closed up 0.13% at $115.97. Year to date, the stock is up over 10%.
This article is not intended as individual or reader-specific investment advice. Do your own research and consult a financial professional, if necessary, before investing in anything.