The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
Photo: S. Baker via Flickr
AAPL Moves With Market
Stocks are mixed this morning with lackluster earnings from banks compared to expectations. Shares of AAPL opened up on a monster holiday quarter and an upbeat outlook, but faltered shortly after and are currently fluctuating between down and flat. Upcoming catalysts for Apple include news regarding Steve Jobs’ return; the launch of the second generation iPad in the second quarter; monthly NPD data (Mac / iPod business); iPhone sales updates (under new carrier Verizon) as well as the launch of the iPhone 5 anticipated this summer; new revenue streams such as video, books, newspapers and social (Ping); moving iTunes into the cloud (see below); and the continued evolution and adoption of Apple TV. Shares of Apple trade at 13x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Wall Street Pleased With The Quarter, Guidance And Market Position (Various)
The Street talks earnings and the future of Apple. For a play-by-play of last night’s call, check out Dan Frommer’s transcript and commentary.
- Citigroup: Richard Gardner is reiterating his Buy rating on shares of Apple and raising his 12-month price-target from $415 to reflect a significant increase in earnings estimates. The blow-out quarter showed strength across all product lines as well as monster gross margin. That said, he continues to prefer Hewlett-Packard at these levels.
- Goldman Sachs: Bill Shoppe reiterates his Conviction List Buy rating on Apple and believes the strong results should underscore the underlying strength in Apple’s fundamentals, especially after the news regarding Steve Jobs’ planned medical leave. He is increasing his 12-month target price to $450, or 18x calendar 2011 EPS, a 22% discount to Apple’s five-year average multiple of 23X.
- Piper Jaffray: Gene Munster says that this is the first quarter that he’s seen Apple’s vision for itself as a mobile device company come to fruition. The company is targeting a massive market growth opportunity while being increasingly profitable. Despite huge increases in estimates, he believes upside potential remains. Munster reiterates his Overweight rating and is raising his price-target to $483.
- Morgan Stanley: Katy Huberty believes that Apple guidance for the calendar first quarter is a bullish sign relative to what the company has done in the past. This is the third quarter in a row that Apple’s revenue forecast, and the first quarter in several years that Apple’s EPS guidance, is above consensus. She reiterates her Overweight rating and price-target of $410.
- Bank of America Merrill Lynch: Scott Craig reiterates his Buy rating and is increasing his price-target to $450 saying his thesis is unchanged. Buy on valuation, product trends, gross margin tailwinds and upward revisions to EPS estimates.
- UBS: Daniel Doddo believes shares of Apple offer compelling value with a strong 2011 ahead. He is raising his price-target to $465 and reiterates his Buy rating. What investors could expect is the largest pre-order and sales ever experienced by Verizon Wireless for the iPhone, further expansion to other CDMA-based operators, continued dominance in tablet share and continued strength from geographic expansion with incremental growth opportunity from further halo effects.
- RBC Capital Markets: Mike Abramsky says that lower sentiment on uncertainty over CEO Jobs’ leave and Apple’s future may restrain valuation and keep shares range bound near-term. However, Apple’s huge momentum and opportunity remain intact, valuation at 11x (cash-adj) remains compelling and he continues to foresee further upside on pending catalysts, earnings outperformance and rising comfort with management.
For updated financials, please visit the Business Insider Apple model and charts.
iTunes Merging With Safari To Bring Music / Apps Into The Cloud (Three Guys And A Podcast)
A rather questionable new rumour is out. Apple will not only discontinue iTunes this year but they’ll replace it with Safari and launch it this September. Apple will leverage the technology they purchased in their Lala acquisition as well as their new North Carolina data centre to bring iTunes into the cloud as a web-only application, which you’ll then sync to your Apple devices through Safari. Doesn’t iTunes do too much already? Cramming it into Safari isn’t going to help matters. Just host the music, that’s all we need.
A More Formal Transfer Of Power Is Needed At Apple (The New York Times)
Apple needs to delegate Steve Jobs’s power more formally to someone else. Apple’s chief executive is handing day-to-day control to the company’s chief operating officer, Tim Cook, yet he retains his chief executive title. This is the third such move, and this time the handover is indefinite. However painful, a more formal transfer to an acting chief executive would have been better. Jobs plays an outsize role at Apple. But his reputation also depends on keeping the company on the soundest footing possible, even if that means formally loosening his grip.
Apple Will Be Fine Without Jobs Because Of Branding (Forbes)
The Apple brand will succeed if Steve Jobs is not able to return to the company after his medical leave because of branding. In that arena, Apple has gone deeper in its psychological assessment. Customers are people who show openness to new ideas and new ways of doing things (“Think Differently” from the campaign of the 80s). They are people who are intellectually curious and more comfortable with emotions. That’s fine and all, but who’s thinking up the next iPad?
Verizon To Offer $200 To Switch From Recently Purchased Smartphone To iPhone
(Boy Genius Report)
Verizon customers might feel a bit slighted by the iPhone announcement. To help remedy that, Verizon will help dial down the hit for those willing to return their recently bought phones and pay full retail for a new iPhone. Recent non-Apple smartphone buyers (on the Verizon network) are eligible to receive up to a $200 Visa debit card when they purchase an iPhone 4 at full retail price by the end of February.
iPhone Users Are The Most Loyal To Apple According To Survey (Giga OM)
iPhone handset owners are the most satisfied with their phones, but Android users are more likely to stick with their platform on their next phone, according to a study by Zokem. iPhone has a vast lead over all others when it comes to platform loyalty (73 on a scale of -100 to 100) while Android is number two (40). That said, iPhone owners are not the group most likely to stick with their current platform, that distinction belongs to Google Android owners at 89% (versus iPhone at 85%).
Business Insider Emails & Alerts
Site highlights each day to your inbox.