Analyst: Apple Is ‘Top Large-Cap Pick’ for 2014


Cantor Fitzgerald analyst Brian White took a decidedly bullish perspective on Apple (NASDAQ:AAPL) in a recent note to investors, calling the California-based company “our top large-cap pick in our coverage universe for 2014.” Although the analyst called 2013 “a year to forget for Apple” due to its poor stock performance relative to the S&P 500 and the company’s first earnings per share decline in 10 years, he believes “2014 will prove to be a year of innovation.”

The analyst thinks Apple’s strong stock performance in 2014 will be fueled by new product innovations, per his note, seen by Wall St. Cheat Sheet. White expects Apple to unveil the long-rumored iWatch wearable tech product in 2014, as well as several other new products. Although there have been some media reports about Apple’s development of a 12.9-inch iPad, White believes this product will actually be a “hybrid device” that will be “bigger than an iPad but more mobile than the MacBook Air/Pro.”

White also said Apple would finally enter the “mega-sized smartphone category” by launching up to three iPhone screen sizes in 2014. White’s prediction is in line with a report from an unnamed source cited by Bloomberg in November. Bloomberg’s source reported that Apple would release two large-screen iPhones in the third quarter of 2014. Similarly, DisplaySearch analyst David Hsieh also forecast two large-screen iPhones in 2014, although he put the release dates in the second quarter.

The Cantor Fitzgerald analyst also noted that Apple will likely ride the momentum of its strong holiday sales into 2014. White cited the “strength in our Apple Barometer” as well as his other recent checks in Asia as evidence of Apple’s strong holiday season. The Apple Barometer is Cantor Fitzgerald’s index of Taiwan-based suppliers that provide many components for the iPhone maker.

Finally, White noted the importance of Apple’s recently announced distribution deal with China Mobile (NYSE:CHL). China Mobile is the world’s largest mobile carrier, with more than 763 million subscribers. Although Apple’s iPhone 5S and iPhone 5C have been available for pre-registration through China Mobile’s website since December 25, the devices won’t hit China Mobile store shelves until January 17. White believes that the partnership with China Mobile will “reignite sales growth in China.”

White also expects Apple to distribute more cash to shareholders in 2014. Based on these reasons, the analyst maintained a Buy rating and a $777 price target on Apple shares.

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