Gene Munster On How Apple Can Regain Growth Stock Status

Apple Inc. AAPL reported Q4 results Tuesday afternoon, slightly beating EPS estimates ($1.67 vs.$1.65) while falling in line on revenue ($46.85 billion vs. $46.89 billion). The company also stated expected Q1 sales of $76 to $78 billion (versus $74.98 billion estimates).

On Wednesday’s PreMarket Prep, Piper Jaffray's Gene Munster talked all things Apple.

Munster remains bullish, maintaining an Overweight rating and raising his price target from $151 to $155.

When asked what he liked about Apple's report, Munster cited a return to growth and guidance "below whisper numbers," adding that the guidance "could have been slightly better than what they gave without supply issues."

Much of Munster’s commentary and his vision for Apple growth regarded the iPhone.

"When will the Street start valuing Apple's stock as a growth stock?" Munster asked. "'If they can get the iPhone business to grow at 10 percent."

Overall, Munster sees Apple’s three- to five-year game plan as one where it continues to invest in services, and mentioned the possibility of a bendable phone, which he speculates could be in production by 2020.

On his $155 target, Munster said that in order for him to increase it further, he would need some indication from management of the features of Fall 2017's 10-year-anniversary iPhone.

Regarding how competitor Samsung’s issues have factored in to Apple’s Q4, Munster stated that he saw them as “a small tailwind.”

Munster's commentary on PreMarket Prep also touched on growth markets, specifically India and China.

"[Apple] is definitely playing up the India theme," said Munster. "It's not as big of an opportunity long term."

He went on to explain that, while India may come to represent 5 percent of Apple's sales over time, the nation is “not China” as far as market growth opportunity for Apple.

Regarding a merger and acquisition strategy to support Apple growth, Munster sees the most likely industry as automotive, while augmented reality is also a likely candidate in the short term.

Listen to the full interview with Gene at 15:19 in the clip below. PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8-9 ET here, or catch the podcast here.