“The stock is cheap, I mean, it’s selling at low multiples,” King Lip, chief strategist at Baker Avenue Asset Management, told CNBC’s Squawk Box on Wednesday. However, Lip said that Apple is going to have to prove itself with a “killer app or killer product” sometime in the next 12 months.
Lip’s comments line up with our own take on Apple right now: That it is definitely at a crucial point in its history, but that many of the doom predictions are far too premature. The analyst noted that, although iPhone sales might be down, Apple’s current 900 million active iPhones provide plenty of monetization possibilities — especially in Services.
“If the company can’t leverage off of that, you know, management … needs to be replaced,” Lip said. “I mean, 900 million iPhones, there’s a lot of services that can sell through that.” This possibility likely explains why Apple shares didn’t fall after yesterday’s earnings call, despite the bad news.
A crucial point for Apple?
At present, AAPL is trading at $154.68. That’s up slightly from Apple’s low of $142 in January, after Tim Cook issued revised guidance based on weak iPhone sales. However, it is down considerably from the high of $232.07 back in early October, following Apple reaching the vaunted $1 trillion valuation.
Lip’s comment about Apple needing an exciting new product in the next six months to one year is certainly a popular one, although it also seems an arbitrary timeline.
It’s certainly the case that Apple needs to do something to excite investors if it’s going to regain its place atop the tech world in the immediate future. But the idea that Apple is headed for oblivion if it doesn’t rush out a major new product in the next year is certainly not correct either.