If you’re looking for something to catalyze Apple Inc. (AAPL) stock, well, you may have to wait a little while. Analysts are now saying that the iPhone 7 that Apple’s expected to drop in September will be a yawner. It’s not until late next year, when the iPhone 8 drops, that AAPL will really do anything special.
AAPL stock, once one of the most consistent outperformers in the entire market, has been lagging the benchmark S&P 500 recently as iPhone sales have begun to wane dramatically. Over the last year, Apple shares are down 22.8% while the S&P is off just 0.3% in its own right.
What’s even more telling is the financial breakdown from last quarter, when Apple reported the first ever decline in iPhone sales. This is bad news, brochachos. The iPhone still accounts for a whopping 65% of AAPL revenue.
So, while it’s great that analysts like Credit Suisse’s Kulbinder Garcha have slapped a price target of $150 on AAPL stock, the fact that such a forecast relies on events late next year doesn’t inspire much confidence.
AAPL Stock: The Age of Innovation Is Dead
I’ve said it before and I’ll say it again: Tim Cook is the anti-creative. He’s introduced no major new products since taking the helm, with perhaps the exception of the Apple Watch, which I shudder to put the label “major” on.
Credit Suisse’s Gaucha predicts an entirely uninspired iPhone 7 this year — one that will merely have a thinner case and more storage headlining as the top improvements.
Tell me honestly, AAPL stock owners: Does this inspire confidence?
Sure, Gaucha’s iPhone 8 predictions are a bit more exciting: “an OLED screen, full glass display, no home button, enhanced haptic feedback, wireless charging and improved camera,” could all come with the iPhone 8 in late 2017, according to MarketWatch.
However, I’ve never been a huge fan of counting on events way down the road when valuing a stock. I recall last year that some of the gaudier forecasts for Tesla Motors Inc (TSLA) were projecting revenues out to 2020 and beyond to derive the present value of shares.
Tesla stock, for what it’s worth, is down nearly 13% in the last year.
Listen, I’m already utterly unimpressed with some of AAPL’s more recent products. The iPhone 6 and 6s are flimsier than the iPhone 4, which was a friggin’ tank. And we really shouldn’t be praising Apple for the higher storage capacity in its phones over the years — Moore’s law essentially says that computing power should double every 18-24 months.
I used to own AAPL stock. It’s not a dumb place to keep your money right now, with its modest dividend and hordes of cash on its balance sheet. But I think the days of innovation are long gone, and $150/share is a totally unrealistic 12-month target.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.