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AAPL Up With Market
Stocks are elevated today by the tech sector as Oracle and Accenture reported solid earnings yesterday. (Note: Research In Motion, which also reported on Thursday, is tanking as it missed expectation.) With the international launch and lines forming in 25 countries for the iPad 2, shares of Apple are up close to 1.5%. Upcoming catalysts for the stock include any update regarding Steve Jobs‘ healthy return; iPad 2 sales updates and international launch this Friday; monthly NPD data to gauge Mac / iPod businesses; iPhone sales updates on new carrier Verizon (and now T-Mobile), the push in China, as well as the launch of the iPhone 5 anticipated this summer; new revenue streams such as video, books / publishing and social (Ping); moving iTunes into the cloud; 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).
Analysts Aren’t Creative And Therefore Underestimate Apple (Forbes)
Where analysts really miss the boat in covering Apple is in showing little creativity in imagining new products the company might roll out in the coming year and what kind of uptake those products will get from consumers. Meaning, this group will consistently miss out on Apple’s upside for the next couple of years and that their price targets are overly conservative and the consensus 12-month price target of $424 is likely laughably low. Missing elements:
- Growth in China
- iPad 2 adoption
- Underestimated iPhone growth
- Uses for the computer data centre in North Carolina
- Generational shift to Macs
- Payment technologies and uses
I would argue that an analyst’s job is to predict various scenarios with the variables at hand, not try and randomly predict future product launches and set the company up, and investor expectations, for possible failure.
Apple Could See Revenue Growth Of 50% The Next Two Years (Businessweek)
Apple’s revenues could grow 50% through the next two years, driven by the demand for iPhone, iPad, and iPod touch apps, according to Forrester Research. He also believes Apple will soon be a $200 billion revenue company, which would put it above tech giants Hewlett Packard and IBM. Consensus estimates are around 35% growth for the next two years. If 50% is more like it, investors might want to back up the truck.
Apple rumoured To licence AirPlay Technology To Sell More Content (Bloomberg)
Apple may be preparing to licence AirPlay video streaming technology to third party consumer-electronics companies later this year. Meaning, consumers would no longer need to purchase an Apple TV to view iTunes content on their HDTV’s. This would most likely help Apple sell more content than ever (taking on Netflix), and should generate a revenue boost large enough to compensate potentially weakened Apple TV sales. Read some scepticism from Jay Yarow at Business Insider.
iPad 2 Supplies Improve For The U.S. (Fortune)
The iPad 2 ship times on Apple’s U.S. online store improved yesterday, shrinking to 3-4 weeks from 4-5 weeks. Could it be that the supply-chain problems analysts have been worrying about ever since the Japanese earthquake and tsunami have failed to materialise? Being the primary reason for the weakness in the stock the last few weeks, it could be oversold.
Daily Trader: Negative Press Did It’s Job, Apple Poised To Recover (Seeking Alpha)
The Dow hit a low of 11,548 on March 16th, the next day Apple hit its low of $326. Now, six trading days later we are already into recovery mode with the Dow at 12,160 and Apple at $344. Do you remember the barrage of negative Apple stories that were being pushed by hedge funds last week? Apparently it did its job. Today’s headlines indicate a complete change in sentiment.