Is TV the Next Bullish Catalyst for Apple’s Stock?
Apple Inc. (NASDAQ:AAPL) is the world’s largest publicly traded company with a market value over $500 billion. It achieved this prestigious standing by developing innovative products that consumers crave. From iPods to iPhones, Apple has one of the best product pipelines in the world. However, unlike the new iPad’s retina display, Apple’s disclosure and secrecy policy does not always provide a clear picture of that pipeline.
After launching the new iPad on March 16, Apple shares climbed from $585 to as high as $644. Since then, shares have given up the gains, falling almost 13 percent from its all-time high. While a new iPhone is expected to be unveiled this fall, some analysts are speculating on a longer-term catalyst to propel Apple shares in the years to come.
According to a report by Piper Jaffray analyst Gene Munster, Apple should unveil a new TV display in late 2012 and launch it within the first half of 2013. He cites supply chain checks, various third party reports and Tim Cook’s interview at the AllThingsD conference last week. Munster believes the Apple TV will sell between $1,500 and $2,000, with screen sizes ranging from 42 to 55 inches.
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As long time Wall St. Cheat Sheet readers know, a ‘Catalyst for a Stock’s Movement’ is the ‘C’ in our CHEAT SHEET investing framework. An Apple TV set could be a huge catalyst for shares, as long as the set is innovative and customers are willing to pony up the money for the device. Munster predicts that the the TV could include Siri voice controls and integrate with content guides. Other key features are likely to include the App Store and design innovation. Munster writes, “We believe the Apple television will include many existing Apple styling cues including aluminum casing and reduction of wires. We expect the design of the TV to make it the stand-out center piece of the consumer’s living room. We expect the TV to be LCD given the high cost of OLED panels.”
Munster’s predictions on an upcoming Apple TV appear to be well within realm of possibilities. Tim Cook recently gave an interview at the AllThingsD conference and said that TV “is an area of intense interest for us.” When asked about Siri, Cook explained, “Customers love it. It’s one of the most popular features of iPhone 4S. But there’s more that it can do, and we have a lot of people working on this.” He continued, “I think you are going to be really pleased with where we take Siri.” Perhaps Cook is hinting that Apple will take Siri right to your living room with a new TV?
Apple has clearly made an impact in the tech sector, a space once dominated by players such as Microsoft Corp. (NASDAQ:MSFT), Hewlett-Packard Co. (NYSE:HPQ), Research in Motion (NASDAQ:RIMM) and Dell Inc. (NASDAQ:DELL). According to CNBC’s All-America Economic Survey in March, half of all households in the United States own at least one Apple product. Furthermore, homes that own at least one Apple product own an average of three. Overall, the average household has 1.6 Apple devices. One-in-10 homes that do not currently own an iProduct, plan on purchasing one next year. If Apple is successful with a TV unit, one can only expect these statistics to improve.
Munster also reiterated his Outperform rating on Apple shares with a price target of $910. He believes a move into the TV industry could boost 2013 revenues by 4 to 8 percent.
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