THE APPLE INVESTOR: Apple Stock Is Dirt Cheap Given This Outlook For 2011 Profits And Verizon iPhone Sales

The Apple Investor is a daily report from SAI. Sign up here to receive it by email.

steve jobs, verizon

Photo: Illustration by Business Insider

AAPL Up In Climbing MarketĀ 
Stocks were mixed after the bell this morning as inflation seems to be at bay and factory output increases for the 5th straight month. Shares of AAPL were trading sideways with the NASDAQ but are currently climbing up. Upcoming catalysts for Apple include monthly NPD data (Mac / iPod business); holiday iPhone and iPad sales updates and carrier expansion (Verizon); new content revenue streams such as video, books, newspapers and social (Ping); moving iTunes into the cloud; and the uptake of the new Apple TV. Shares of Apple trade at 15x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Sell Side Research Going For Year End And 2011 Predictions (Various)
Analysts stay busy through the holidays.

  • Gene Munster at Piper Jaffray upped his iPhone sales estimates, fully baking in a Verizon iPhone into calendar 2011. He predicts the phone will launch early- to mid-year. Munster also moved his price target for the shares higher, to $438, up ~37%. (The Wall Street Journal)
  • November domestic sales data from the NPD Group was released Monday, and Gene Munster says it shows Apple on pace to sell between 4.1 million and 4.3 million Macs in the December quarter with international growing faster than domestic, a “neutral data point” considering growth is in-line with expectations. Apple will likely see between 22 – 28% year-over-year growth. (Apple Insider)
  • Goldman Sachs resurrected its coverage of Apple as Bill Shope initiated on the stock with a Buy rating and a price-target of $430. Bill believes that including tablets, Apple’s PC share will rise from 5% to 12% next year as the company is predicted to sell over 37 million iPads next year, or 68% of the total tablet market. He also believes that with the untapped $50 billion sitting in the bank, Apple will issue a dividend. (VentureBeat)
  • Morgan Stanely’s Katy Huberty, who remains bullishly Overweight on shares of Apple, has removed the stock from the Morgan Stanley best ideas list. Her rationale? The stock’s outperformance over the past 6 months (up 28% versus the S&P up 14%). That said, she still believes, that Apple shares are attractively valued. (The Wall Street Journal)

John Gruber Doesn’t Agree With Dan Frommer’s iPhone Prediction (Daring Fireball)
Business Insider’s Dan Frommer believes that Apple will be able to sell 10 million iPhones through Verizon in the first year. John Gruber would say more. If AT&T can sell 14 million iPhones in four quarters, selling to an installed base who’ve had the iPhone since 2007, why wouldn’t Verizon, selling to a larger installed base who’ve been starved of the iPhone, be able to sell more? He would expect Verizon to sell more iPhones than AT&T does.

Shares Of AAPL Are Dirt Cheap (CNN Money)
Paul R. La Monica at CNN Money believes that Apple, despite its gaudy sounding stock price of over $320 a share, is actually, a bargain. Shares are only trading at about 17x earnings estimates for this fiscal year (Sept year end). Analysts currently expect Apple to post a profit increase of nearly 26% in fiscal 2011. So the company is trading at a sizable discount to its anticipated growth rate.

Tencent Beats Apple In Tech-Growth Ranking (Bloomberg Businessweek)
Tencent has upstaged Apple in Bloomberg Businessweek’s ranking of the best-performing technology companies. Apple finished No. 2 behind Tencent, China’s dominant instant messaging service, in the list, which considers a combination of share performance, sales and profit growth, return on equity, and workforce increases.

NOW WATCH: Tech Insider videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.