Apple Return Prospects ‘Dramatically Reduced’: Analyst

Apple iPhone
Manuel Balce Ceneta
Apple iPhone

When you’ve become a $600 billion company, what’s next? If it’s Apple, there is room for growth, but not as much as before, Pacific Crest Securities analyst Andy Hargreaves told CNBC.

Speaking Tuesday, the day Apple hit that market-cap milestone, Hargreaves said Apple has “room to go higher,” he said, but “I think the return expectations have to be dramatically reduced. It is a massive company at this point.”

While consumer interest in Apple's three “monster” products seems to be nowhere near slacking, Hargreaves said, “there’s only so many people in the world.”

“There is a much smaller number of people that can actually afford to buy Apple’s products,” the analyst noted. “So you have to start taking that into consideration when they’re selling as many units as they are.”

Market penetration, “particularly in developed markets, is quite a bit higher than what it was a couple of years ago," he added. “There’s room for some growth, but not what we’ve seen in the last three months in particular [and] in the last couple of years.”

So if you are holding Apple stock, what next?

“If you’re somebody comfortable with a 10 percent annual return going forward, I think you want to continue to have your money in Apple," the analyst said. “If you want more than that and you feel you have opportunities that’ll give you more than that, I would absolutely recommend putting [your money] somewhere else.”

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Neither Hargreaves nor his company own Apple shares.