Credit Suisse has initiated coverage of Apple (AAPL) with an Outperform rating and a $200 price target. CS thinks that a number of key factors will allow Apple to defy current macroeconomic conditions and grow at a tremendous clip:
Key factors are enabling Mac momentum to defy macro conditions. We believe Mac performance is due to several unique drivers that were not present in prior downturns. We anticipate that Apple will continue to grow at a multiple of the overall market for many years to come.
Also, Credit Suiise thinks that iPhones will be an even more profitable product for Apple than was previously thought, due to the switch from a revenue sharing model to a subsidy-based model:
iPhone economics have changed for the better. We provide a comparative analysis of the old, revenue sharing iPhone business model and the new, subsidy-based model. After considering the economic costs of iPhone unlocking, we find that the new business model is likely to be far more profitable for Apple over the long term.
CS thinks that Apple’s fair value equates to a multiple of 30X 2009 EPS:
We believe Apple’s valuation is set to expand and we would be buyers of the stock. Our 12-month target price of $200 equates to a P/E multiple of 30 times our calendar 2009 EPS estimate of $6.66, which is about in line with the stock’s one-year average, but still below historical levels.
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