THE APPLE INVESTOR: Stock Predictions Jumping From $300 To $1,000

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gordon gekko

AAPL Up As Market Rises
As fears subside on foreign bank worries and Portugal’s debt gets auctioned off, the market is once again in the black. Future catalysts for AAPL include monthly NPD data (Mac / iPod business); iPhone unit updates and AT&T exclusivity expiration; iPad sales updates; new content revenue streams such as video and books; and the refresh of Apple TV. AAPL trades at 14x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).

The Analysts Are Back From Vacation, Flooding Investors With Research (Various)
From AT&T activations to long-term Android threat to enterprise penetration, they’ve got it covered:

  • UBS analyst Maynard Um increased his 2011 iPad sales forecast to 28 million units however he slashed his 2010 unit sales growth estimate to 13.1% from 18.4% (so basically he pushed out spending dollars). He believes the iPad is adversely impacting the PC industry, not including Macs, in part because Apple’s tablet is priced to compete against cheap computers. Um reiterated his buy rating on Apple shares, raising his target price to $350 from $340.
  • Barclays Capital analyst Ben Reitzes lowered his PC sales estimates while increasing his expectations for tablets. He now expects PC units to grow 16% year-over-year in 2010, down from an earlier estimate of 19% (his second revision this quarter). Reitzes raised his 2010 tablet forecast to 15.85 million units, up from 15.2 million previous and cites three main factors for the increase: 1) greater availability of the iPad; 2) upcoming international launches of the device; and 3) imminent tablet launches from other manufacturers.
  • Gene Munster at Piper Jaffray, while the axe on Apple, sees Google’s Android OS aggressively capturing market share in the years ahead. Over the next five years, Google will be victorious in the smartphone battle with Android controlling over half of the smartphone market and Apple between 20-30%. That’s what a hardware agnostic OS will do (just ask Microsoft).
  • Apple has ramped up production of the iPad to meet demand, doubling its monthly build to two million according to Morgan Stanley analyst Katy Huberty. And the company evidently wants to have more product on hand. She believes that Apple recently indicated a desire to move to 3 million units per month in the calendar fourth quarter (the holidays). This implies a run rate of 36 million in 2011, close to her 40 million supply chain forecast.
  • After meeting with Apple management, Deutsche Bank analyst Chris Whitmore believes that Apple is increasing its efforts to drive greater penetration into enterprise and SMB accounts. The company is “increasing its investment in the VAR channel, direct sales capacity and Apple Care to support its enterprise goals.” That’s not good for Microsoft.
  • UBS telecom analyst John Hodulik raised his forecast for September quarter Apple iPhone activations at AT&T to 4.5 million from 2.5 million, which would be up from the 3.2 million activated in the June quarter.
  • The equities research analyst at Gleacher and Company (that’s a new one to me) initiated coverage of Apple with a Buy rating and a price target of $345. The analyst was impressed by the refreshes with the iPod and the Apple TV. And that’s why I’ve never heard of that shop.

Ping Attracted 1 Million Users In 2 Days (Apple)
Apple said that more than 1 million users have joined its new Ping social music network in the first two days after the launch. Three million people downloaded iTunes 10, so about a third of those joined the network. In looking back at Facebook’s ramp to a million users, it took the company about 11 months. Granted, they were purely college focused at that time and didn’t have a database of 130 million people, but it’s still fun to compare.

Apple To Trade At $300 Per Share In The Near Future (Peridot Capitalist)
In recent weeks, Peridot Capitalist (a value investor) has been an aggressive buyer of shares of Apple. As the stock has steadily fallen over the summer, it has become quite undervalued relative to growth as well as the broader market. Even if management doesn’t allocate its $50 per share in cash in more productive ways, Apple shares will once again trade at a premium to the market in the not-too-distant future. A $300 price target doesn’t take overly aggressive assumptions to get there.

Forget $300, Apple Is Going To $1000 Per Share By 2015 (Market Watch)
Cody Willard is pounding the table on Apple. He believes the stock will hit $350 before the year ends and $1000 by 2015. His first rationale (weak and mildly irrelevant in my view), Apple’s got tons of cash. Then there’s the Apps business. Fundamentally it is changing the way we interact with our computers and the Internet. And finally, the company just released the two hottest selling holiday items: the new Apple TV and the new iPod Touch. That’s great, but why $1000? I’m not saying it couldn’t happen, but where are the numbers to support it?

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