Co-portfolio manager Channing Smith, of the Capital Advisors Growth Fund, says that Apple’s (NASDAQ:AAPL) stock will hit $600 by the end of the year, and offered some explanations that seem to have eluded many analysts who have been putting down their estimates for the company.
On CNBC‘s “Squawk On The Street,” Smith predicted that Apple is expected to have a weak quarter, the results of which have already been priced into the stock, which will put the focus on the second half of the year when Apple launches new products and puts some of its $140 billion of excess cash to work. Smith has recently increased his position in Apple.
“What we think is going to happen is Apple gets a pass on this quarter and investors are going to start looking towards the summer and the fall, when you start to see new product announcements. We’re going to see some excitement over what Apple is going to do something with its cash, that’s our expectation,” Smith said. “But we think the focus really goes into the second half of the year, a new product announcements, potential announcements with China Mobile and a lower priced iPhone.”
A decline in Apple’s stock price from $705 in September to the $460-range that it has been at recently has nudged shareholders to put pressure on the company to offer up some of its cash reserves as dividends or buybacks. CEO Tim Cook said the company has been taking a serious look at the possibilities, but the company has not made any official announcements yet.
Smith says that the continuous downgrades to the company’s stock has actually been beneficial for the company, which has a lower bar to meet for the coming quarter. He added that it’s important for investors to realize that Apple’s stock is no longer a “hyper-growth stock.”
“We need to realize that we are entering a mass adoption stage, so what you are going to see is earnings are going to come down into the mid-teens, revenue is going to be in the mid-teens,” he said. “The days of the hyper growth are probably over.”