ISI Group Reiterates Strong Buy Rating, $600 PT on Apple Following iPhone 5C/5S Announcement

In a report published Wednesday, ISI Group analyst Brian Marshall reiterated a Strong Buy rating and $600.00 price target on Apple (NASDAQ: AAPL).In the report, ISI Group noted, “We attended AAPL's highly anticipated introduction of the low-cost iPhone (formally dubbed the iPhone 5C as expected) and the iPhone 5 refresh (aptly named the iPhone 5S). The new iPhone 5C sports many solid features (e.g., 4.0” Retina screen, polycarbonate seamless shell which comes in 5 colors, 16GB/$99 ASP and 32GB/$199 with 2-year contract, etc.) while the iPhone 5S adds 64-bit SoC called A7, new motion co-processor chip called M7, improved camera system, new fingerprint scanning security called Touch ID, etc. Importantly, the iPhone 5C marks the company's first foray into the ‘mass market' segment of the smartphone industry and has the potential to return AAPL to y/y EPS growth (as early as the Dec-13 qtr, in our view). While the success of AAPL's positioning at the ‘high-brow' segment of the cell phone industry over the past 6+ years is undeniable, unit growth is slowing as this portion of the market approaches saturation (e.g., iPhone shipments of ~135mil in 2012 reached ~7% unit share of the overall ~2bil unit industry). This is why the introduction of the iPhone 5C is paramount at this juncture…AAPL needs to attack the mass-market segment of the industry where the majority of the unit opportunities now exist, in our view.”Apple closed on Tuesday at $494.64.