This Apple Bull Says It’s Do-or-Die Time for Bigger iPhone

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Apple (NASDAQ:AAPL) is nearing its “do or die” moment for a larger version of the iPhone, according to analyst Brian Marshall of ISI Group. Marshall is very bullish on the Cupertino-based company, and rates its shares a Strong Buy with a price target of $600.

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He also admits that he’s out of the consensus view for his arguments that Apple needs a larger-screened phone to remain competitive, even though he has seen no indication from the company’s supply chain that this would be the case.

“I would say the three key points for the stock are, first and foremost, a 5-inch iPhone; two, a low-cost iPhone, so they can penetrate emerging markets, where their market share is half what it is in US; and third, return of cash to shareholders,” Marshall said, and elaborated further:

“They have to migrate to the 5-inch screen iPhone this summer. I don’t think most people think that’s going to happen. I think we have to hear from the supply chain in the next 60 days if it’s going to happen. It is imperative they migrate to a larger-screen or they’re just going to lose a lot of market share. If they just come out with an iteration of the iPhone 5, they’re going to be in trouble. At the Mobile World Congress [telecom trade show] in Barcelona in February, every major high-end smartphone was had a larger screen. Most people are migrating to five inches. If they don’t launch this 5-inch phone this summer, I think there’s going to be some downward pressure to the numbers [for Apple's financials]. This is a do or die moment for Apple. There will be tremendous pressure to iPhone going forward, which makes up 65 percent of gross profits as we know.”

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During the interview with CNBC‘s Half Time, Marshall also weighed in on Apple’s reluctance to raise the dividend. “If you would have asked me the same question [when will they raise the dividend] 30 days ago, I would have said within a month. I’m not quite sure what they’re waiting for. I think it’s imminent, everyone thinks it’s going to happen. The company had a real scary period when Steve first came back, and it’s the same management team, and that muscle memory is a strong thing. But this is a company with $140 billion in the bank, and generating $40 billion of incremental cash flow every year. I’m not sure what the roadblocks are at this point.”

Here’s how shares of Apple closed on Wednesday:

Screen Shot 2013-04-03 at 9.07.52 PM

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