Gene Munster Talks Apple's Future On Benzinga's PreMarket Prep

Gene Munster of Piper Jaffray was a special guest on Benzinga's PreMarket Prep show on Wednesday to help dissect Apple Inc. AAPL's second-quarter results and outlook.

Jumping right into it, Munster described Apple's guidance as "disappointing" due to what the analyst believes to be an overall slowdown in the smartphone market, not overall weakness in the market as Apple may have alluded to.

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Meanwhile, Apple could make up for the weakness in iPhone sales by expanding into new categories. However, Munster noted that the timeline of such an entry is unknown and could be a source of concern for investors.

"Apple needs to diversify beyond the iPhone," Munster said. "Services is helping with that, but longer term they need to find other categories whether it is wearables, or cars, or virtual reality – those are the wait-and-see stuff."

Munster expanded and said that Apple's secretive car research program, dubbed Project Titan, likely employs 400 to 600 people. The analyst added that global car sales total approximately 70 million units a year, and if Apple were to capture even a small market share of just 2 million units at an average price of $60,000 each that would amount to $120 billion in revenue – a figure that would be "enough to move the needle."

The analyst suggested in the past that Apple should acquire Tesla Motors Inc TSLA – a view that has not changed, as the company's balance sheet is "large enough to accommodate" Tesla's run up in valuation.

Strategically, Apple may want to acquire Tesla, as its appetite for large-scale M&A activity is now "greater." In fact, the company may be preparing the investment community to absorb a large M&A deal as a great way to enter new markets.

Finally, Munster suggested that investors take advantage of Apple's beaten up stock and buy a "great company" ahead of a major product cycle – the iPhone 7, especially with expectations being "so relatively low."