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AAPL Stock: 100.57 ( + 0.04 )

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Analyst: Tablet rumors mean Apple stock is undervalued

updated 03:35 pm EST, Wed December 23, 2009

75 percent chance of January event?

Apple stock is likely undervalued at the moment, contends Piper Jaffray analyst Gene Munster. Current models of share performance are said to be ignoring the Apple tablet, which is increasingly rumored to be launching in early 2010, possibly as soon as January. Munster suggests that there is at least a 50 percent chance of the tablet being unveiled next month, and a 75 percent chance of some sort of Apple event.

If no tablet is shown in January, the company may still announce a camera-equipped iPod touch, and/or an Apple TV with support for a subscription service. The Touch variant was originally expected by many media outlets to debut in September; the subscription service has mostly been speculation, but has gained some backing courtesy of a Wall Street Journal report. The Apple TV has elsewhere been described as long overdue for a hardware update.

Assuming the tablet ships in March, Munster estimates that some 1.4 million units could be sold next year. A 2 percent boost in revenue could be generated if the tablet has an average selling price of $600. In terms of functionality, Munster expects the device to run a modified version of the iPhone OS, supporting both current App Store titles and a new category.

"We believe Apple's tablet would compete well in the netbook category even though it would not be a netbook," the analyst comments. "Rather it would focus more on apps, entertainment content (from the iTunes Store), and web surfing."

Apple stock is forecast to increase as hype around the tablet grows, and other analysis firms begin devising models.




by MacNN Staff

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Comments

  1. joecab

    Joined: Dec 1969

    +1

    hah?

    I still don't get how Apple can be undervalued when we don't even know what frickin' operating system the damn thing is going to run, or anything else it can do, really. *sigh*

  1. Constable Odo

    Joined: Dec 1969

    0

    Gene Munster is at it again...

    It seems as though Apple has been claimed to be undervalued for at least two years. Since late 2007 Apple must have added at least $8 billion dollars in reserve cash, maybe opened at least 50 more stores, probably sold about 25 million more iPhones and the stock is still about $200 a share. I think it's P/E has dropped slightly, though. Was it Cramer who said Apple could be worth about $300 a share? Andy Zaky was positive the accounting change would propel the stock to the moon and back. As far as I can tell, Apple had a short spike after earnings and slid back while both Amazon and Google were climbing. So I'm curious as to why Munster seems to think Apple is undervalued and the rest of the world thinks it's overvalued. At least the part of the world that has any say over Apple's share price.

    As far as the tablet is concerned, if it even exists, is anyone except Apple fanboys going to buy it. All the Windows users say it will be just an overpriced device with less functionality than a $250 netbook. How the heck is Apple going to sell that many? And even if it did, how is that going to move Apple's share price? 11 or 12 million iPhones sold in a quarter can't even do that much. I'm really puzzled about how Munster keeps saying Apple is worth so much and yet it really doesn't seem to have as much juice as Amazon which only sold a couple of million Kindles in all of 2009.

  1. testudo

    Joined: Dec 1969

    -5

    undervalued

    It is obvious why Apple is undervalued. Besides the obviousness that any rumored device should cause the stock price to increase by 10%, at the least. Munster has a lot of stock that was bought 2 at $200/share and he really really really would like to get rid of it before the end of the year to help boost his year-end numbers.

  1. testudo

    Joined: Dec 1969

    -3

    potential users

    I don't know about potential users. If Apple is hawking this as a 'video' device, the market is slim. People aren't even buying an AppleTV to watch video on a real TV, are they going to buy video for a small screen?

    Bear in mind Apple has moved into after-market sales. They're no longer happy just selling you the hardware. They want to sell you from the iTMS. Be it apps, movies, music, or rumored books, newspapers, magazines, etc.

    And considering how so many revolted over DRM'd music, could it be the reason of slow video sales/rentals is all the DRM and other restrictions on watching this stuff? (And, yes, I'm guessing 'slow' sales, mainly because you don't hear Apple crowing about great sales, and they, like everyone else, like to just brush over the non-stellar stats).

    Another question is how many people would want to tote around yet another device? Wasn't one of the great things of the iPhone was that it merged your iPod, Phone, and PDA into one. And then added apps so that you could even leave the computer home at times. With all that, are people going to want to go back to adding another device into their pocket/bag?

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