Goodies: Apple has demonstrated huge growth in past 7 yrs, the current PE ratio is at the low end compare with its history, PEG ratio is low (around 0.7 according to Bloomberg), has pile of cash (around 80 by end of year), momentum/market share of all it's product line (except iPod) is strong, etc.
However, from institutional investors aspects, these reasons may not be good enough; Apple's market is already close to "too large", meaning PE compression seems inevitable (same for all growth stocks which turn into more mature business), all funds are perhaps already over-weight apple, and there are other good names that are value at much lower PE (Take HP as example). From a fund manager aspects, apple is already at the top, the challenge is to stay at the top - thus the surprise are more likely from the downside not upside - u can actually observe this mentality that apple share price over-react on the negative news and under-react on the positive news during the last 12 months.
From a lot of fund managers aspects (I believe) Apple real entry of barrier is the miracle create by Steve Jobs that somehow he manages and motivates the apple team to achieve continuous innovation in both existing and new product categories. Now that's the issue : Steve Job's health.
My judgement is, unless we see the entire tech sector are going to be re-rated up (unlikely in near term) or somehow there are huge new money flowing in the tech sector (hey we are already mid-way in QE2 and rates expectation in coming 2 yrs is up!) it's going to be tough for any institutional investors adding positions on this Apple.
Now that it doesn't mean everyone should get out of the position now, it just means (1) Time of entry is important coz the stock will likely trending upward but trades within pretty large range and/or (2) It may be a better trade to put on short-put positions or buy-write positions. The goal of longing apple perhaps is not to enjoy a huge upside (I think 500 target is a bit optimistic - u can do the math on how large apple will be if IT REALLY is a 500 stock), but just looking for relative out-performance to the general tech sector AS LONG AS it still delivers the investors expectations on Apple's innovations.
Look at RIM/MSFT/Intel/Dell, see what happens to it's PE when they stopped surprising the institutions. There is no mercy/emotion in institutional holdings at most time, they can sell the shit out of the positions when they see fit. Their love is on their relative performance and thus their career and bonus, not as a share holder of Apple.
Just my 10 cents.