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Forget iPhones, Apple Investors Are Really Focused On This

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Apple Inc. (NASDAQ: AAPL) is in the midst of a "seminal" week, FBR Capital analyst Daniel Ives recently told CNBC. Ives, who in the past has called for Apple to buy GoPro Inc (NASDAQ: GPRO), still holds a Buy rating on the stock with a $150 price target.

This coming quarter is a "prove me" quarter, Ives added. While the company is the "gold standard" in several markets -- including smartphones, watches and laptops -- many investors are ultimately focused on what Apple does with its massive cash balance.

"A lot of investors -- really the Street -- is focused on: Does Cook use some of that $200 billion...?" Ives mentioned a strengthened buyback as a possibility, and also the possibility of strategic M&A, like a purchase of Time Warner Inc (NYSE: TWX) assets or an outright buy of Netflix, Inc. (NASDAQ: NFLX).

When it comes down to it, though: Instilling confidence this quarter will restore it in investors for the rest of 2016, he said. If the iPhone 7 build is less than what the market is expecting, Alphabet Inc Class C (NASDAQ: GOOG) could overtake the company as the largest in the world by market capitalization, Ives concluded.

A Miss Doesn't Mean Much In Long-Run

Tim Lesko of Granite Investment Advisors had a slightly different take. "If this is a weak quarter for iPhone sales, certainly that happens," he told the outlet, but added that in the long-run, a miss might not mean a lot.

With the iPhone 7 coming and Apple's cash balance, Lesko said Apple still has upside. 

"At a time when PC sales continue to decline, Apple continues to gain market share...at a time when other watches haven't really done anything, Apple Watch has the leading market share in smart watches."

Apple shares rest near the triple-digit mark on Monday's trading as investors inch closer to the company's earnings report.

Latest Ratings for AAPL

DateFirmActionFromTo
Apr 2018Morgan StanleyMaintainsOverweightOverweight
Apr 2018Monness Crespi HardtInitiates Coverage OnBuy
Mar 2018BarclaysMaintainsEqual-WeightEqual-Weight

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