Channing Smith, portfolio manager at Capital Advisors Growth Fund predicted Tuesday on CNBC’s ‘Squawk on the Street’ that Apple (AAPL)’s stock would hit the $600 range by the end of this year. The primary driver for this price target according to Smith would be the second half of the year when Apple launches new products and puts some of its existing cash reserves of $140 billion (projected by Moody’s (MCO) to hit $170 billion by year’s end) to work.
“What we think is going to happen is Apple gets a pass on this quarter and investors are going to start looking towards the summer and the fall, when you start to see new product announcements. We are going to see some excitement over what Apple is going to do something with its cash, that’s our expectation,” Smith said. “But we think the focus really goes into the second half of the year, a new product announcements, potential announcements with China Mobile (CHL) and a lower priced iPhone.”
Smith, whose firm has been long Apple since December 2009, also added that while new products, a new dividend plan, or a share buyback program would boost the stock price back up to about $600, it’s important for investors to keep in mind that AAPL is no longer a “hyper-growth stock,” but a value stock.
“We need to realize that we are entering a mass adoption stage, so what you are going to see is earnings are going to come down into the mid-teens, revenue is going to be in the mid-teens,” he said. “The days of the hyper growth are probably over.”