It looks like Apple Inc. (NASDAQ: AAPL) may have reached a top in its smartphone sales. The company’s iPhone 6 has been so phenomenally successful that analysts seem convinced that its growth will have to slow down. Carl Icahn, the Wall Street celebrity who is one of Apple’s largest investors, says that the company “undervalued and misunderstood.”
It’s hard to believe that Apple is misunderstood, given how widely followed the company is from every single angle. No company has ever attracted as much scrutiny as Apple under Tim Cook, but Carl Icahn still reckons that he is the only one that understands the firm’s business. His most recent report on the Cupertino, California company put a price target of $216 on the firm’s shares.
Icahn backs Apple once more
On Twitter on Tuesday Carl Icahn sent a message. Apple is misunderstood and the world should expect another in-depth report about the company’s business in about two weeks. The investor’s last report on Apple concentrated on the company’s capital return program and the company’s intention to continue returning excess cash to shareholders.
Tim Cook is now regularly conversant on his intention to send lots of cash directly to shareholders, and a good deal of that may have to do with Carl Icahn. The report also went into detail on the specifics of the way Apple deals with its repatriation taxes and the way in which the market values the company.
What he did not go into, however, is the company real business. The report from Icahn didn’t show a new method of calculating iPhone sales, nor did it go into Apple Pay numbers. The report that shows how the company is “misunderstood” may have some insight into the business. If not it won’t address the concerns of the company’s analysts.
Apple looks to diversify
Cowen & Co. analyst Tim Arcuri was one of the analysts that was most vehement in pushing the issue of iPhone dominance in a report released after the company’s second quarter earnings release.
Arcuri says that Apple will have to look for growth in other area in order to make up for a slowdown in the growth of the iPhone business. Most analysts aren’t arguing that Apple will stop growing iPhone sales, they’re arguing that growth will slow down.
Most recent reports are built on a foundation of justifying an ever-increasing share price while predicting a top of growth in the iPhone business. The most important issue for shareholder is how Apple is going to keep its growth rate up without being able to maintain that level of growth in the iPhone business.
It is possible that Carl Icahn has an answer to that question, or his next report may concentrate on the company’s financial position once more. Whichever it is, it’s sure to be a market-moving analysis, and one worth looking out for in your Twitter feed.