Analyst: Apple Investors Need This Confidence-Booster

With the sentiment surrounding Apple’s (NASDAQ:AAPL) stock staying glum, the company needs to announce something big and improve shareholders’ mood, Barclays Capital’s Ben Reitzes has said in a research note. Reitzes has a clear-cut solution for the company to get out of its “funk”, adding: “Apple needs the living room.”

What is Apple’s Problem?

“Apple remains in correction territory with shares down 24 percent since September 21st (S&P 500 down about 3 percent over the same time frame) – and down 9.5 percent in the last week (S&P 500 was flat) after a partial recovery,” the analyst writes, according to Barron’s. “Most of the questions we are fielding are around long-term margin sustainability and a potential for a significant sequential sales slowdown after the December quarter — in both the March and June quarters.”

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Reitzes adds that at a recent investor conference, while 55 percent of the shareholders felt that concerns around margins were the biggest issue hampering Apple’s stock, 30 percent believed that the company was suffering from a lapse in innovation. Why?…

According to the analyst, investors think iPhone growth is flattening out and don’t believe the company has a “next big thing.”

CHEAT SHEET Analysis: Catalysts for a Stock’s Movement

One of the core components of our CHEAT SHEET investing framework focuses on the factors that could affect a company’s stock. Reitzes, who has an Overweight rating on the iPhone maker and an $800 price target, clearly has answers for the company, since his note is titled: “Perhaps Excitement around a TV Could Get Apple out of its Recent Funk?”

According to the analyst, the next calendar year will see Apple make a more thoughtful TV effort with several standout features, but he also has an interesting take on it. “In our opinion, any move by Apple further into television will be led by differentiated services and software with an integrated ecosystem, not by hardware,” the analyst writes. Apple will explore a new service that “integrates iOS, iCloud, iTunes, and more content that would bring customers a new experience around a TV-like device.”

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