Analyst: Here’s Apple’s $80 Billion Opportunity

With a new high-definition television product and a rumored smart watch, Apple (NASDAQ:AAPL) can generate more than $80 billion in global incremental revenue, Morgan Stanley’s Katy Huberty wrote in a bullish note on the company on Tuesday. The analyst added that the current drop in the company’s share price was factoring in a deceleration in revenue and earnings growth that was unjustified in light of medium- and long-term growth drivers.

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According to Huberty, Wall Street was pricing in negative 4 percent long-term earnings per share growth in the stock, even though Apple has been achieving 14 percent revenue growth. “In other words, investors expect significant share losses and/or margin contraction,” she wrote. “In addition to iPhone market expansion through new products and carrier partners, Apple’s entry into new markets can help shift investor perception of long-term growth.”

Huberty estimated that Apple could earn $17 billion in annual revenue and $4.50 per share earnings if it were to launch a smart TV in the U.S. at an average selling price of $1,300. That would come from a barely 10 percent penetration of the half a billion active iTunes account users, and could go up to as much as $68 billion and $18 in EPS if the launch is turned global.

(Chart courtesy of Morgan Stanley)

Morgan Stanley Apple TV


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