CASE STUDY: How To Get Attention If You're An Unknown Analyst At A No-Name Wall Street Firm

Tim Cook Apple

Photo: By Justin Sullivan/Getty Images

Let’s say you’re an analyst, and you’ve just moved from one tiny Wall Street brokerage to another, and you really want to make your mark. What do you do?If you’re Brian J. White, who just moved from shuttered Ticonderoga Securities to Topeka Capital Markets, you slap a nice palindromic $1,001 price target on Apple (officially making him the first analyst to “go there” and put a $1,000+ target on the stock).

So why does he see the stock surging by over 2/3rds over the next 12 months?

The key points:

  • Apple is dominating the mobile internet, and there’s no sign of letup there.
  • China is going to end up being huge for the internet and mobile internet, and Apple is in a strong position to capitalise.
  • The Apple TV will mark the beginning of Apple’s dominance in the living room.

As for the number specifics, White writes:

Our 12-month price target of $1,001.00 for Buy-rated Apple is based on just over 17x our interest expense/income adjusted CY13 pro forma EPS estimate plus net cash per share of $103.66. This equates to a straight P/E of just over 19x our CY13 EPS estimate and is below the mid-20 multiple of 2006-2010. In our view, Apple’s valuation does not reflect the growth the Company has been able to deliver in recent years, nor future growth prospects. Between FY04-FY11, Apple grew sales by 44% per annum and increased EPS by 86% per year. Trading at a P/E (ex-cash) of just under 10x our CY13, we believe the stock still has significant upside potential.

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