Is Apple Yet to Make Sense of Losing Steve Jobs?

Avondale Partners analyst John Bright has initiated his Apple (NASDAQ:AAPL) coverage with a mixed bag of predictions — writing that while new products may act as positive catalysts for the company in the coming months, the loss of co-founder Steve Jobs may end up outweighing the gains.

“We acknowledge Apple could reaccelerate earnings growth and build a competitive barrier through product innovation, for example with a TV product, or through increased stickiness of its existing products,” Bright wrote in a note to investors, according to Barron’s. “Yet given Apple’s decelerating, albeit attractive, LT earnings growth, expected gross margin pressure, the speculative nature of any new product innovation, and to be seen stickiness of iCloud, we believe the probability of increased competition outweighs the probability of innovation without Jobs.”

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Bright was not incredibly bullish with his price target predictions either, and accorded the company a Market Perform rating and a $600 target. Apple is currently trading at $542.

According to the analyst, while the iPhone and the iPad should produce double-digit earnings growth for the next three years, the rate of growth will decline from 59 percent this year to 19 percent by 2015. He predicted falling margins because of growing rivalries.

“We expect margin compression as incremental market penetration is driven by more price sensitive consumers and as competition becomes increasingly aggressive,” Bright wrote. “We therefore turn to product innovation and increased stickiness of current devices to build a competitive barrier, potentially protecting margins and driving a reacceleration in earnings.”

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