Apple Inc. (AAPL): This Analyst Takes On The Margin Bears

Apple Inc. (NASDAQ:AAPL) has its share of fanboys, and its share of eternal critics, no doubt. The same goes for many tech companies, especially ones that are involved in computer hardware and/or software. And on the markets, there are hundreds of analysts, and most of them are expected to be completely dispassionate, independent and neutral toward the stocks and companies which they are analyzing.

But poor Gene Munster of Piper Jaffray.

He has gained a lot of notoriety for his usually optimistic and almost prescient take on all things Apple Inc. (NASDAQ:AAPL). Sometimes he is right; but other times he has been dead wrong. And maybe that is why he is featured a lot and is considered one of the “pre-eminent” analysts about Apple.

The eternal optimist, the glass-half-full bull known as Gene Munster is back at it again, though he actually seems to be taking a more reasoned approach to his latest research note, instead of going on and on about the products that he has said are coming but haven’t materialized. He wrote a note this week counteracting some analysts’ fears that Apple Inc. (NASDAQ:AAPL) gross margins would drop below 30 percent in the next couple years with the iPad Mini now on store shelves and a still-a -rumor cheaper iPhone about to go into market.

Whether you take Munster at his word or not, he at least makes the case that seeing Apple margins drop so low is “overblown.”

Based on his calculations (we hope for his sake he used a different calculator than the one that told him the iTV would be coming in 2012), his “worst-case” scenario would see margins drop as low as 32 percent by 2015, and that would take, as he put it, 50-percent cannibalization of the iPhone by the cheaper iPhone, a 15-percent margin on the cheaper device and a 10-percent margin on (gasp! There it is) the iTV. iTV – the Loch Ness Monster of tech!

While Munster is not buying all the doom and gloom with Apple Inc. (NASDAQ:AAPL), Munster still sees at least some reasonable headwinds with the stock in that he lowered his price target from $688 a share down to $655 looking forward a year. One has to remember that Munster is assuming the iTV is coming, which he says will lower margins – so what if it doesn’t come until 2015? What if an iPhone 5S comes out before the cheaper iPhone?

What do you think about all of this? Do you think we should bother following what Gene Munster says about Apple Inc. (NASDAQ:AAPL)? Do you find Munster’s calculations reasonable? Let us know your thoughts in the comments section below.

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