Apple’s (NASDAQ:AAPL) growth will have to slow because the company is up against the law of large numbers, but several factors remain in the stock’s favor, Bernstein Research’s Toni Sacconaghi has said. That means that even though Apple’s stock may continue to be range-bound in the near term, in the longer term, it “offers a compelling combination of attractive growth, reasonable price, and significant future option value,” the analyst said.
“If the company grew at the same pace it did over the last five years for the next five years, its revenues would be $1.2 trillion (yes, trillion), or nearly the size of Australia’s GDP,” Sacconaghi wrote in a note to investors, according to Barron’s. But while the “stock has [now] stalled” and the slowdown is imperative, Apple is becoming a “changing investment story,” he added.
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“Against the backdrop of slowing growth, we believe that the investment case for Apple is changing from a hyper-growth story to a high-quality, branded consumer company (think of Nike (NYSE:NKE), LVMH [Louis Vitton], Ralph Lauren (NYSE:RL), Saks (NYSE:SKS), etc.), characterized by a premium brand and high customer repurchase intention,” the analyst wrote.
According to Sacconaghi, his firm’s consumer surveys show that 95 percent of current iPhone users plan on repurchasing another version of the Apple smartphone. “With a high repurchase intention, driven by iOS platform stickiness, Apple’s revenues and profits will increasingly be driven by repeat customers,” he wrote.