The iPhone maker proves it knows how to keep rivals at bay
As we noted earlier, at its “Let Us Loop You In” event yesterday, Apple Inc. (NASDAQ:AAPL) unveiled two new products: the 4-inch iPhone SE, and the 9.7-inch iPad Pro. The tech giant also announced a price cut for the Apple Watch Sport, which now starts at $299. Now, analysts at the Street are disclosing their stance on the tech giant’s strategy.
In a recent note, Drexel Hamilton said that Apple has a lot to look ahead to this year; the research firm pointed out that the iPhone maker is supposed to expand into India, maximize value for shareholders, and further develop the Apple Watch. Furthermore, the company also has a new iPhone cycle to look forward to with its upcoming 7th-generation iPhone.
Analyst Brian White pointed out that the stock is currently trading just above 9 times its earnings per share (EPS) estimate for calendar year 2016, which provides an attractive entry point for investors. Commenting on the 4-inch iPhone SE (16GB), Mr. White said that it comes at “a very attractive starting price of $399.” The analyst was shocked at this price, as he estimated the entry-level iPhone to fall within a $400-500 price range. As it turned out, the iPhone SE 64GB is priced at $499.
The analyst compared the smartphone with Apple’s higher-priced models, the iPhone 5s, 6, and 6s, while stating: “We believe this attractive price point for the iPhone SE could help Apple in developing countries, including the iPhone’s expansion in India and in Tier 3-5 cities (80-90% of China’s households) in China.”
Apple shares closed, down 0.01% though, at $105.91 yesterday. The stock traded 0.10% lower at $105.80 as of 6:10 AM EDT Tuesday. Drexel Hamilton stays with his Buy rating as well as a price target of $200, which reflects its estimated 89% upside potential for Apple shares for the next 12 months.