The next few months are going to be tough for Apple investors, as if the last few haven't been tough enough. Amid investor pessimism, this time of year is seasonally slow for Apple.

The company used to unveil new iPad models in the spring, which could give it a boost earlier in the year, with new iPhones in the fall to carry it into the holiday shopping season. That's up in the air right now, as the iPad product cycle is anyone's guess at this point. Throw in the fact that Apple is now being rather honest with its guidance forecasts, and investors are contemplating the distinct possibility of earnings misses over the next two releases. Citigroup has been pondering the same thing.

Even though BTIG Research thinks misses are in store for both the March and June quarters, analyst Walter Piecyk has still gone ahead and upgraded shares to "buy" and slapped a $540 price target on the iPhone maker.


June bug
Piecyk's estimates for the March and June quarters are below consensus estimates, and the company's June guidance is a risk factor in itself when it announces earnings in April. Results for the June quarter could come under pressure from rival product introductions. Samsung is unveiling its Galaxy S IV today, HTC showed off its new One earlier this month, and BlackBerry is also launching its Z10 in the U.S. during March. Both AT&T and Verizon have now announced pricing and availability of the Z10, which will compete on the high-end at $200 on contract.

BTIG notes that tightened carrier upgrade policies weighed on Apple's iPhone sales in 2012. While slow upgrades were a headwind last year, that could turn into a tailwind in 2013. Investors were pleasantly surprised by the overwhelming interest that the iPhone 4S garnered when it launched in 2011, particularly after skeptics derided it as an incremental upgrade (which it was). But that also means that iPhone 4S buyers are quickly approaching upgrade eligibility within the next couple of months, and if there's one thing investors know about Apple customers, it's that they're a remarkably loyal crowd.

Samsung, HTC, and BlackBerry, among other rivals, will be working hard to win those smartphone shoppers over, but an imminent iPhone 5S may hold them at bay.

It's worth noting that BTIG downgraded Apple last April at a time when it saw strong quarters ahead, so upgrading ahead of a weak quarter is the flip side of that equation. Disappointing June guidance could easily knock shares down below $400, but Piecyk still thinks that's a risk worth taking considering the potential upside.

What's the rush?
BTIG expects a low-cost iPhone to be launched this year, but is not including the possibility of a larger iPhone in its estimates. The niche phablet trend is undeniably growing, but BTIG thinks that Apple can bide its time due to its brand awareness and differentiated software experience. The sales data also imply there's no rush.

The analyst also believes a cash-related announcement is due out this month, which echoes what other analysts are expecting since it's been a year since the last cash call. BTIG sees the cash question as more of a management issue. If no dividend materializes, management will be heavily scrutinized for failing to return more cash. BTIG is modeling for Apple's hoard to grow to $144 billion by the end of the March quarter.

A $5 billion freebie
BTIG's fiscal 2014 estimates include an extra $5 billion in revenue for an "unspecified new product." That's a big freebie that amounts to a vote of confidence in the company. There's no shortage of possibilities of what Apple may have up its sleeve, so this $5 billion in sales could come from just about anywhere.

That may seem to be a generous freebie, but $5 billion is actually rather conservative for new product categories. Morgan Stanley's Katy Huberty recently estimated that an iWatch could turn into at least $10 billion in incremental revenue, and an iTV could add $17 billion to the top line. That's before even considering new services that Apple could launch, like a mobile payment option.

Google may have the upper hand in a lot of ways with cloud services (like Maps and Gmail), but BTIG notes that Android's fragmentation limits the reach of new services that the search giant introduces because so many users are stuck on old versions. Meanwhile, Apple is extremely efficient at upgrading users to the newest versions of iOS, so new services can potentially reach higher penetration levels much faster.

R-E-S-P-E-C-T, find out what it means to me
The $540 price target is derived from an earnings multiple of 12 and fiscal 2014 EPS estimate of $45. That would require some multiple expansion from its current P/E of just 9.8, even as that EPS estimate represents modest growth from Apple's current $44.11 in trailing EPS. New growth opportunities in affordable iPhones and new product categories that can drive growth beyond 2014 will be key to earning more respect from the Street.

There is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

The article Why This Analyst Thinks Apple Will Miss -- and Why It's a Buy originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, owns shares of Apple and Verizon Communications. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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