Analyst: Tim Cook Hints At Cheaper iPhone

Apple’s (NASDAQ:AAPL) investors do not appear to have taken chief executive Tim Cook’s comments at the Goldman Sachs technology conference very well, with the stock dipping around the midday mark. But Piper Jaffray’s Gene Munster, who has an Overweight rating and a $767 price target on Apple, said he believed Cook’s comments supported his view that the company was in the process of making a cheaper iPhone.

Is Apple now a once-in-a-decade buying opportunity? Click here to get your 24-page Ultimate Cheat Sheet to Apple’s Stock now!

“We continue to expect Apple will have a cheaper iPhone-related product,” Munster wrote in a research note following Cook’s comments. “We are modeling for this in the September 2013 quarter.”

According to the analyst, this new device to address emerging markets may or may not be similar to the existing iPhone. “Tim Cook noted that the original iPod cost $399 and eventually the company released a $49 iPod shuffle which addressed a broader market,” Munster wrote. He added that another strategy to master developing markets could be the rumored smart watch, which would also have a lower cost through a different form factor.

Munster also believed Cook as well as Apple were serious about cash allocation increases and would possibly raise the company’s shareholder distribution after the March quarter.

The bottom line, according to Munster, was that investors were likely to return to the stock once the potential of new products came into focus over the next three to six months. Defending his bullish price target later on CNBC, the analyst added that he would continue to stick to it. “We are stubborn,” he said. “If we’re right about this phone, we think they can definitely hit that target” in the next twelve months.

Don’t Miss: Tim Cook: Apple Won’t Acquire Unless It Needs To.