Goldman raises Apple target, advises clients to buy shares

[AppleInsider]

Shares of Mac maker Apple Inc. rose nearly 2 percent in morning trading on the Nasdaq stock market after an analyst for investment bank Goldman Sachs raised his price target on the company to $195 from $165.

"We would buy Apple shares into year-end as market momentum and earnings upside drive the shares higher," analyst David Bailey advised clients, explaining that across-the-board strength in Macs should drive revenue, gross margin, and earnings upside versus Wall Street's consensus estimates for the company's recently-ended September quarter.

The analyst expects the iPhone and iPod will take a back seat to Mac when Apple announces its September quarter results on October 22, but remains confident that sales of the handhelds to meet his expectations of 810,000 iPhone units and 11.3 million iPod units.

"Better-than-expected component pricing, mostly in DRAM, and a richer mix of Macs -- including a rebound in Apple's commercial desktop (Mac Pro) on the back of the Adobe CS3 upgrade cycle – should push gross margin to around 32 percent, 250 bps higher than the company's target," he wrote.

Along with his price target hike, Bailey also increased his revenue estimate for the quarter to $6.1 billion from $5.8 billion (compared to the company target of $5.7 billion and the Street's $6.0 billion) and his earnings-per-share forecast to $0.85 from $0.75 (compared to the company target of $0.65 and the Street’s $0.83).

Looking ahead, the Goldman analyst believes Apple will undoubtedly remain characteristically conservative with its December quarter guidance, "probably providing targets below the Street’s revenue forecast of $8.5 billion and earnings estimate of $1.35." He's currently forecasting the Cupertino-based firm to generate sales of $8.1 billion and per-share earnings of $1.31.

Bailey also told clients that the European launch of iPhone together with a seasonal jump in iPod sales after the recent line-up refresh should add to strong Mac sales in the December quarter.

"Although details are few at this point, we expect Apple to announce a new model of the iPhone, at least one new iPod and, with lesser conviction on our part, a sub-notebook at MacWorld on January 14," he added.

Shares of Apple rose $3.26 or 1.95 percent to $170.

[ View this article at AppleInsider.com ]

[neven]

Glad to see AAPL climbing still.

The next-to-last sentence is hardly the crux of the article, but it's bound to be discussed the most (hey, new products!) For my part, I expect a new iPhone as well, but... new iPod? No way.

[markb]

$195 is gettin pretty close to that $211 PJ number that sooo many mocked when it was first put out.

[mgkwho]

Anyone else think it funny that their target was $165 even after AAPL surpassed it?

At least one new iPod? I have to agree with neven, no way. The closest thing that would happen is the shuffle gets a capacity upgrade.

-=|Mgkwho

[SpamSandwich]

Word on the street is that AAPL may split soon... 2 for 1, or 3 for 1.

[Kasper]

Originally Posted by SpamSandwich

Word on the street is that AAPL may split soon... 2 for 1, or 3 for 1.

Where do you see (hear) this?

Thanks,

K

[Wildguess]

Originally Posted by SpamSandwich

Word on the street is that AAPL may split soon... 2 for 1, or 3 for 1.

Rumor, not word, on the street AAPL will split stock. Rumor was they were going to split at last quarters earnings announcment.
My guess is they will by January.

[quinney]

Originally Posted by mgkwho

Anyone else think it funny that their target was $165 even after AAPL surpassed it?

At least one new iPod? I have to agree with neven, no way. The closest thing that would happen is the shuffle gets a capacity upgrade.

-=|Mgkwho

AAPL's big quick run up lately caught GS with their pants down

[solipsism]

Originally Posted by mgkwho

Anyone else think it funny that their target was $165 even after AAPL surpassed it?

At least one new iPod? I have to agree with neven, no way. The closest thing that would happen is the shuffle gets a capacity upgrade.

-=|Mgkwho

Yeah, it made me laugh. These people are really on top of things. What even more pathetic with these conservative analysts is that these share prices are based on the next 12 months. I expect to see $195 before the year's end.

I don't see the Shuffle getting a capacity upgrade. I think 1GB is plenty for lacking a visual display What i do see happening is Apple lowering the price of the tried and true shuffle in Lat3 November by $10-20 to increase unit sales dramatically and help squash some of the withdrawal from SanDisks excessive price lowering around the holidays.

[walshbj]

I saw the split discussion for the first time on the Yahoo messages board. I don't believe it. I'm more inclined to believe the people who say Eric Schmidt's (Google) influence is keeping them from splitting like they have in the past.

I'm very curious about Macworld. I hope a 3G iPhone so I can get one! But I certainly don't expect new iPods. Maybe an HD Apple TV. With recording capacity. But I doubt the recording part! Maybe an Apple branded tv?

Which reminds me - how about wifi speakers? or a wifi boombox of some sort. maybe in the iPal form factor. It's time to start cashing in on the change to Apple, Inc.

How high can this thing go?? I'm gathering some cash so I can buy more on the next BIG dip. I've bought two batches in the last few years. One in the thirties. One at 60.

Anyway, to sum up: No new ipod. No split.

[GQB]

Originally Posted by walshbj

I Maybe an HD Apple TV.

Apple TV is already HD. ITS content is what needs to catch up.

[walshbj]

Sorry, I didn't realize it's HD.
So it's just the stuff on itunes that isn't HD? Where do people get HD content to watch on Apple TV?

[GQB]

Originally Posted by walshbj

Sorry, I didn't realize it's HD.
So it's just the stuff on itunes that isn't HD? Where do people get HD content to watch on Apple TV?

Self created, and I thought that some preview content was HD. Not sure.
But you can definitely take content you create on your own HD camera and edit in iMovie and view it at least in 720p through your Apple TV.

(as usual, tho', happy to be corrected.)

[walshbj]

Yeah - you're right - I looked it up on the Apple site.

Maybe one of these days I can drop my DirecTv and just buy the few shows I watch on iTunes. I think I'd end up saving money and watching less stupid tv

Getting further off topic: I can't believe how long it takes to convert video from one format to another. I have a TiVo and pull stuff from it to my G5. But it takes the G5 forever to convert a 30 minute show. I wonder how much faster a Mac Pro is on those tasks? I don't want to subject my Macbook Pro to too much of that kind of work.

[SpamSandwich]

Originally Posted by Wildguess

Rumor, not word, on the street AAPL will split stock. Rumor was they were going to split at last quarters earnings announcment.
My guess is they will by January.

Word... rumor... same thing.

Kasper... sorry I don't have a link. I read it on a stock trading site a few days ago. They were analyst comments.

[monstrosity]

Why have my AAPL shares just plummeted?

[monstrosity]

Originally Posted by walshbj

I saw the split discussion for the first time on the Yahoo messages board.


Anyway, to sum up: No new ipod. No split.

Which message board is this?

[monstrosity]

Ahhhh am on on my own here (or are you all off selling your shares for whatever reason that I dont know!).

[bluedalmatian]

Wish they'd pay us a divi though

[aaarrrgggh]

Originally Posted by bluedalmatian

Wish they'd pay us a divi though

Dividends would be nice, but I'd rather look longer term towards stock buy-back or actually using the money to buy the next innovators out there...

[aaarrrgggh]

Originally Posted by monstrosity

Ahhhh am on on my own here (or are you all off selling your shares for whatever reason that I dont know!).

People just taking profit. I bought a handful more shares at today's low. Next two weeks will see lots of up and down movement, if history tells us anything. I'm betting that Apple hits $195 before MWSF. I'm sure there will be a few buying opportunities before then where the stock is under $160.

[fluoride]

Then someone explain why they dropped like this?

(For zoom, click 1d, and you'll see)

[g5man]

There have been three different articles starting on Friday about the possible split.

One was in Barrons online, and the other in Forbes.http://www.forbes.com/2007/10/09/app...rtner=yahootix

[ThinkExpensive]

I really don't know why Apple stock is so tempramental these days, in my opinion it's scaring some investors that it's growing so much so quickly (25% in way less than a year).

[walshbj]

monstrosity, I was talking about this board....

http://messages.finance.yahoo.com/mb/AAPL

[kkehler]

There was quite a dip today in AAPL...actually at one point it hit 153. It was quite a sight to see, however there wasn't enough time to put in an order. AAPL might see more of a pullback tomorrow and it would be a great opportunity to add to your positions.

http://www.everything-macs.com

[SpamSandwich]

Originally Posted by monstrosity

Why have my AAPL shares just plummeted? Anything to do with a stock split? Stock splits dont normaly seem to have much influence in my very limited experience, anyone?

Don't sweat it. Hold on and you'll be fine. Just some quick profit-taking by the big-boy stock manipulators clubs.

[SpamSandwich]

Originally Posted by kkehler

There was quite a dip today in AAPL...actually at one point it hit 153. It was quite a sight to see, however there wasn't enough time to put in an order. AAPL might see more of a pullback tomorrow and it would be a great opportunity to add to your positions.

http://www.everything-macs.com

For you short term stockholders, I suppose any time there is a sizable dip is a good time to get in. Last time I bought was at 137, more at 135, and the time before that was 51. Like I said... get in anytime.

If for some unknown reason AAPL were to plummet into the 130's again, I'd buy a giant block to really make it worth my time.

[anantksundaram]

Originally Posted by monstrosity

Why have my AAPL shares just plummeted? Anything to do with a stock split? Stock splits dont normaly seem to have much influence in my very limited experience, anyone?

Stock splits amount to a hill of beans.

It's no more/no less that saying "give me a $10 bill and I'll give you two $5 bills."

[omahajim]

Originally Posted by walshbj

Maybe one of these days I can drop my DirecTv and just buy the few shows I watch on iTunes. I think I'd end up saving money and watching less stupid tv

I did precisely that about four months ago (dropped my DirecTV). Now I buy The Colbert Report and The Daily Show on iTunes so I can watch them when I travel, and use the rest of my time at home doing more useful things than sitting in front of the stupid satellite.