Apple's Christmas List? Adobe, Box, GoPro And Maybe Even Tesla

• Apple Inc. AAPL shares are down 4 percent in the last one month, and are trading meaningfully below their 52-week high of $134.54.
• FBR & Co’s Daniel H. Ives maintained an Outperform rating on the company, with a price target of $175.
• Ives commented on potential M&A ideas that Apple could consider in 2016.

Analyst Daniel Ives wrote, “Heading into 2016, Apple and Cook are entering a critical juncture from a product, growth, and strategic perspective.” So far Apple has built its “golden consumer empire” with an unparalleled iPhone franchise. Ives believes that now Cook would be looking to building out “new technology growth frontiers/product areas for the next decade.”

Apple is poised to release the highly anticipated iPhone 7 in 2016, with major design changes expected. In the near term, the company’s performance would be determined by continued growth of the iPhone 6s. The company has $200 billion of cash, Ives pointed out, while adding that it could use these funds to purse a larger acquisition, “as the conditions are ripe for Cook to make a move, in our opinion.”

The analyst mentioned top potential acquisitions for Apple in 2016:

Adobe

Adobe Systems Incorporated ADBE could help Apple penetrate the enterprise segment, which currently accounts for only about 10 percent of the latter’s revenue. Apple is aggressively ramping its corporate presence with the iPad Pro and recent partnerships.

“Adobe would provide a nice pipeline into the enterprise; gaining control of the dominant platform for creatives could give Apple a boost in selling its hardware (Macs, iPads, iPhones) into this all-important user base,” Ives said.

He added that Adobe’s Document Cloud and Marketing Cloud applications are assisting companies to capitalize on the growth of digital marketing, proliferation of mobile devices and IoT [Internet of Things].

Box

Box Inc BOX could also aid Apple’s penetration of the enterprise segment.

“Box would give Apple an avenue into enterprise storage and enable it to expand its product tentacles (hardware/storage) into the enterprise cloud frontier. Coupled with the existing IBM partnership, Box would enable Apple to further ramp its consumer iCloud platform into the enterprise market,” Ives wrote.

GoPro

GoPro Inc GPRO makes sense because action cameras are “uniquely positioned at the intersection of Apple’s smartphone, wearables, and multimedia offerings,” the FRB report stated.
Moreover, GoPro’s new product cycles could give Apple an entry into a space in which its competitors are making significant investments, like drones and VR. “We also see strategic value in GoPro being integrated with Apple’s strong multimedia ecosystem (e.g., iTunes, Apple TV, etc.),” Ives said.

Tesla

Alhtough Tesla Motors Inc TSLA seems like a long shot, Project Titan - Apple's electric car initiative – could become a key growth focus over the next decade.

“In our view, acquiring Tesla’s advanced battery technology would greatly accelerate Apple’s entrance into the next-generation auto arena, and we estimate valuable economies of scope could be realized while transitioning to mass-market volumes (e.g., consumer electronic batteries, automotive software, etc.). While Apple will most likely slowly build out its auto R&D, a Tesla deal would clearly accelerate this move,” Ives mentioned.