Just ahead of its holiday quarterly earnings report, Apple finds itself in a situation that the company has not been in for a while with investor expectations for the next year being surprisingly low. Ben A. Reitzes of Barclays Capital believes that Apple’s January 23 earnings conference call is the company’s most important one of the last decade.
Apple’s stock price seems to have fallen by nearly 17% over the last three months. One of the reasons is believed to be investor concern over Apple’s continued growth potential and gross margins heading into the next year. Barclays has maintained its overweight rating for AAPL stock, as Reitzes believes that Apple faces lower expectations for its fiscal year of 2013. He believes that the new product cycles from the company which are going to be released later this year will help change investor sentiment.
One of the key points that Reitzes mentions is the possibility of Apple building a low-end iPhone to address emerging markets such as China. While some investors showed concern that a low-cost iPhone would cut into Apple’s margins, Reitzes believes that other investors will change their tune if and when the product is built. According to a note written to investors, Reitzes said the following regarding the matter:
We believe Apple can sell a phone with a more inexpensive casing for emerging markets and a (bill of materials) below $150, and believe concerns around margin dilution may be overdone, given the pending benefit to revenues.
Momentum can change quickly among the leaders in disruptive mobility — along with sentiment. If Apple can prove yet again it is more than a handset company, then we believe shares can recover.