Apple’s (NASDAQ:AAPL) may have gone unexpectedly cold over the past few months, but according to Wells Fargo’s Maynard Um, the stock will thaw this summer once the company launches a new iPhone. According to Um, Apple will continue the trend of having a very similar next model — like the iPhone 4 and iPhone 4S — with the use of shared components in the two versions boosting gross margins. With the launch of the “iPhone 5S,” Apple’s current “black ice” will “thaw through summer,” Um wrote in a research note, according to AppleInsider.
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Improving gross margins will in turn pave the way for investor sentiment to turn positive. “While this requires some patience as the cycle transitions and then matures to drive gross margin, we believe valuation will rise with sentiment,” the analyst wrote.
Um did lower the bottom of his “valuation range” on Apple’s stock to $680 to $730 from a prior $710 to $730 to account for delays in Mac shipments.