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Morgan Stanley bumps Apple stock price target to $720

post #1 of 47
Thread Starter 
With shares of Apple on a chart-topping climb, investment bank Morgan Stanley has lifted its price target for the stock to $720, with a 12-month bull case estimate of $960.

Apple's stock reached new heights on Tuesday, up 2.92 percent at market close. Shares of the company have been on a rally since the beginning of the year and have climbed 40 percent to $568.10.

Analyst Katy Huberty sent a note to investors Tuesday informing them that Apple had been added to the firm's Best Ideas list. The analyst continues to believe that investors "underestimate" Apple's strong position, raising her price target from $515 to $720. She also said the stock could climb as high as $960 by next March in a bull case scenario.

Morgan Stanley's new target is one of the highest seen to date. The Street reported last week that FBN Securities had set a new Wall Street record with its AAPL price target of $730. The previous high was Barclay's Capital's $710 price target.

Enterprise tablet adoption combined with demand upside from a lower-priced iPad; a strong upgrade cycle for LTE-capable iPhone later this year and emerging market iPhone (plus iPad, Mac) growth driven by new carriers are all potential upside drivers in her mind. In addition, Huberty added that the world's largest carrier, China Mobile, "could add more incremental iPhone shipments" next calendar year than the Street currently expects.

According to a January 2012 CIO survey by Morgan Stanley, 56 percent of U.S. companies already purchase tablets for corporate use. Assuming Apple manages to maintain an 80 percent share of the enterprise tablet market, Huberty believes enterprise iPad purchases could reach 9 million units and $5 billion in revenue for Apple next calendar year.




Meanwhile, consumer demand is also expected to remain robust. A survey from late last year showed that 13 percent of U.S. consumers expect to buy an iPad in the next 12 months. Huberty pointed out that the data indicates as many as 80 million unit sales globally next year. The analyst also suggested that the $100 price cut on the iPad 2 could bring about more than 15 million U.S. iPad sales and over 35 million global sales.

The analyst said Apple's next-generation iPhone is likely to include a "higher-resolution and potentially thinner screen, new casing material, faster processor, and quad-mode baseband chip that works on multiple flavors of 3G and LTE." Based on a recent survey indicating 62 percent of iPhone owners planned to upgrade to the iPhone 4S, the release of an LTE iPhone later this year would imply a base case of 148 million and bull case of 160 million upgrade purchases, supplemented by 38 million and 86 million shipments to new users.




Huberty named China and other emerging markets, like Brazil, as "huge untapped markets" for Apple that present a long-term upside for the company. Emerging markets have 14 times as many members of the smartphone-friendly 25- to 34-year-old age group than Western Europe and North America. Apple only directly address 20 percent of China's high-end subscriber market, Huberty said, adding that a China Mobile-compatible iPhone would reach the other 80 percent.

Morgan Stanley presented its $80 earnings per share and $960 valuation bull case as "reasonable" because of several factors: Apple's capital expenditure forecast predicts a "similar revenue trajectory;" the estimate doesn't include new product categories such as an HDTV or a low-price iPhone; the forecast of 129 million iPad units is in-line with current survey data; predictions for iPhone growth, with the exception of China, assume an average upgrade rate and a new subscriber increase similar to calendar 2011 and the firm assumes "no multiple expansion despite a possible dividend."

Apple expects to spend $7 billion on capital expenditures in fiscal 2012, possibly implying fiscal year revenue of as much as $190 billion. Morgan Stanley believes the "vast majority" of that will go to equipment purchases for its suppliers that will help the company get a leg up on its competitors.




The analyst did go on to outline potential risks factored into the bank's $405 Bear Case valuation. Lower carrier subsidies, increased competition in low-price smartphone and tablet markets, competition from Microsoft's Windows 8 in developed markets, lack of product roadmap visibility beyond 2013 after last year's management change and multiple compression as growth slows were all named as risks for Apple.

[ View article on AppleInsider ]
post #2 of 47
Holy crap

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post #3 of 47
Yeah - and here I thought the mid-$500 range was getting a little silly... Glad I bought some down at $128...
post #4 of 47
AI never seems to point this out (MacRumors is now pointing out Gene Munster's unreliability), but Katy Huberty is one of the worst AAPL analysts and certainly isn't a star-rated analyst per StarMine.

AI readers should categorically toss all AI articles with references to Munster, Shaw Wu, Huberty, and a a few others into the circular bin.

Without the caveat emptor, they are worthless. As a matter of fact, it might be better to take an opposite position from what those "anal-ists" are predicting since they have garnered a track record in piss-poor accuracy.
post #5 of 47
Quote:
Originally Posted by cvaldes1831 View Post

Katy Huberty is one of the worst AAPL analysts and certainly isn't a star-rated analyst per StarMine.

As soon as I saw the AI headline, my first thought was "Uh, oh. Maybe I'd better sell my Apple stock".
post #6 of 47
Almost doubling the stock is a little bit ridiculous.
post #7 of 47
Quote:
Originally Posted by bdkennedy1 View Post

Almost doubling the stock is a little bit ridiculous.

It already doubled in price from 2 years ago.

Considering the sales of Apple products lately... the stock price doubling next year is a definite possibility.
post #8 of 47
Quote:
Originally Posted by Michael Scrip View Post

It already doubled in price from 2 years ago.

Considering the sales of Apple products lately... the stock price doubling next year is a definite possibility.

I agree. I've been saying the stock could hit $1000. in the next 3 - 5 yrs--but if it doubles in the next year, then what?
post #9 of 47
They say the next iPhone will have a higher resolution screen.... What is the point in going higher resolution then your retina? I can see a wider color gamut, a reflective screen, tactile screen, or a 3D screen. I kinda doubt anything other then better color gamut is possible right now though.
post #10 of 47
Quote:
Originally Posted by esummers View Post

They say the next iPhone will have a higher resolution screen.... What is the point in going higher resolution then your retina? I can see a wider color gamut, a reflective screen, tactile screen, or a 3D screen. I kinda doubt anything other then better color gamut is possible right now though.

Uh, the next iPhone will only have a higher resolution screen if it's larger in size- I thought thats an obvious assumption. However, I don't even see the need to up the rez even if it is larger, seeing as long its already at such a high dpi and I'm not sure if it would be worth the fragmentation and developer headache. My ideal situation is the screen size being upped to 4.0" and maintaining the same resolution.
post #11 of 47
Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.
post #12 of 47
Wow and they were saying apple would cool off.
An Apple man since 1977
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An Apple man since 1977
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post #13 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.

I think Apple knows this and are VERY careful when designing a new product. Every detail is taken into consideration.

In contrast... other companies launch 15 new phones every year. If one is a stinker... no big deal.
post #14 of 47
Quote:
Originally Posted by bdkennedy1 View Post

Almost doubling the stock is a little bit ridiculous.

It is not only ridiculous...it is absurd. But so is the growth in earnings that Apple has been accomplishing.

Earnings have been accelerating. They roughly doubled over the past year; if they slow a bit...let's say to a 60% growth in earnings, and Apple starts to use it's outrageous cash hoard to retire a substantial number of shares, having the share price go up 70% from here over the next year would be expected.

Ridiculous? Yes. To be expected? Yes.
post #15 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.


I think you are completely off base with this "analysis". Apple has both an enormously loyal customer base with industry-leading satisfaction rates, as well as a long and consistent history of steady product improvements. It is selling products with enormous market potential. The iPad is well on its way to becoming a gorilla (an enabling technology...iOS...with enormous market share and high switching costs). The growing ecosystem with iCloud seamlessly integrating all one's devices.

The idea that this huge avalanche of success is one small mis-step away from catastrophe is absurd.
post #16 of 47
At this rate, Apple's share price might pass Google's share price by the end of the year. I would have thought that to be impossible last year. I notice that Apple is a little less than $50 below Google now. Record iPad sales and a blowout quarter would really boost Apple's shares. Of course, Google would have to slow down a bit. Early last year, I didn't think Apple's market cap would exceed ExxonMobil's market cap either, so Apple is really full of surprises. Estimates continue to rise. Apple may go through a month or two of trading sideways this year, but I definitely won't complain. Apple is absolutely the best company on the planet and I'm glad I'm a shareholder. I didn't even think that Apple would hit $600 in all of 2012, but these past few weeks have shown me that anything is possible with Apple.
post #17 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.

As one of the poster responded, I am sure Apple is certainly aware of it. If you look in past history, Apple had made some mistakes - I think iPod Shuffle was and still is. People keep worried about competitors catching up - So how many chances did Apple gave them? Plenty and they keep raising the ante. So, at end of the day, I am not really concerned about that. The Apple TV was really an hobby and apparently it is not doing too bad.

Though, I am a bit concerned about all the analysts upping the target on Apple. I think there is some level of exuberance and I am afraid it is going to hurt no help Apple's price. Now, my average cost has been around $125 or so and it is not getting down to that level, except if there was a split.
post #18 of 47
Apple has typically beaten the estimates, even the bullish ones. Assuming nothing changes with the number of shares Apple's price will need to be $1,072.54 for Apple to be valued at 1 trillion dollars.



Quote:
Originally Posted by radster360 View Post

Apple had made some mistakes - I think iPod Shuffle was and still is.

I don't see how the Shuffle was a mistake.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #19 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.

So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.

Utter rubbish! You show a complete lack of understanding of Apple's vision, culture and management team. It is in fact not about one product but an entire ecosystem tied together by multiple products. Although one product could cause a hiccup, even negative reviews to date have not had a material effect as Apple consistently delivers.
post #20 of 47
I have been saying Apple will be a trillion dollar company within a few years for a long time. I was laughed at many times. I still feel strongly this will indeed happen. Even I will be shocked if it happens in the next two years but if Apple beat the Bulls again then it's far closer than I imagined.
Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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post #21 of 47
Quote:
Originally Posted by digitalclips View Post

I have been saying Apple will be a trillion dollar company within a few years for a long time. I was laughed at many times. I still feel strongly this will indeed happen. Even I will be shocked if it happens in the next two years but if Apple beat the Bulls again then it's far closer than I imagined.

Value wise we're barely over half way so a lot can happen, but I do think it will happen. Does the stock market take a dip, grow, or does its own thing during a major election season?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #22 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.

This is very true.
post #23 of 47
Quote:
Originally Posted by commoncents View Post

The idea that this huge avalanche of success is one small mis-step away from catastrophe is absurd.

What might happen if the Samsung screen production facility were to have a huge disaster? An earthquake or explosion for example? A military attack by North Korea?
post #24 of 47
Doing some quick math, Apple would need to sell at least 400 million iPhone and iPads a year at $625 ASP and 25% margin to have a shot at $80 per share

400 million x $625 = $250 billion revenue x 25% margin = $62 billion profit / 932 million shares = $67 profit per share

Apple shipped 52 million last quarter. 200 million run rate. So, would take massive growth - doubling sales - to get o the $960. A lot to ask for in 12 months

Company is on a roll. I expect the iPhone 5 launch will be like nothing we have ever seen

Windows survivor - after a long, epic and painful struggle. Very long AAPL

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Windows survivor - after a long, epic and painful struggle. Very long AAPL

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post #25 of 47
Quote:
Originally Posted by Red Oak View Post

Doing some quick math, Apple would need to sell at least 400 million iPhone and iPads a year at $625 ASP and 25% margin to have a shot at $80 per share

400 million x $625 = $250 billion revenue x 25% margin = $62 billion profit / 932 million shares = $67 profit per share

Apple shipped 52 million last quarter. 200 million run rate. So, would take massive growth - doubling sales - to get o the $960. A lot to ask for in 12 months

Company is on a roll. I expect the iPhone 5 launch will be like nothing we have ever seen

Pretty sure Apple usually makes margins around ~40% on their products, and rumors recently speculated at 51% margin on the new iPad.
post #26 of 47
Quote:
Originally Posted by TangoZulu View Post

Pretty sure Apple usually makes margins around ~40% on their products, and rumors recently speculated at 51% margin on the new iPad.

Please take the time to understand the difference between 'gross margin' and 'profit margin.'
post #27 of 47
Wow. Apple up another $15 this morning, mkt cap approaching $550B.
post #28 of 47
The P/E ratio is at a very healthy 16.18.
If that happens their market cap will be over $1 trillion! Unprecedented!
I hope they do a stock split soon though...
post #29 of 47
Quote:
Originally Posted by TangoZulu View Post

Pretty sure Apple usually makes margins around ~40% on their products, and rumors recently speculated at 51% margin on the new iPad.

That is the gross margin. The 25% is their net income % after all expenses. It is what is used to calculate the P/E ratio. I believe the actual percentage was 28% last quarter

Windows survivor - after a long, epic and painful struggle. Very long AAPL

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Windows survivor - after a long, epic and painful struggle. Very long AAPL

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post #30 of 47
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

What might happen if the Samsung screen production facility were to have a huge disaster? An earthquake or explosion for example? A military attack by North Korea?

all apple's competitors would be doomed, but not apple itself with their 100billion and the healthier than ever mac. others have no chance but right now apple controls every chance.
post #31 of 47
Quote:
Originally Posted by FriedLobster View Post

Holy crap

My words exactly.
post #32 of 47
Little Katy Huberty who put a hysterical sell on AAPL @ 80 gets religion? This woman's head is so far up her butt that her bullish call is prolly a bad omen for Apple.
post #33 of 47
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

What might happen if the Samsung screen production facility were to have a huge disaster? An earthquake or explosion for example? A military attack by North Korea?

LG and Sharp would work as hard as possible to pick up the slack and take in a bunch of new customers? Or do you somehow presume only Apple would be effected by this?
post #34 of 47
This reminds me a lot of the stock runs we used to read about in the last century.

Why do I get the feeling that the bankers/analysts are constantly talking up the stock to force it up and up before eventually they cut and run making huge profits in the process.

I know absolutely nothing about stocks and shares but this looks like a train crash waiting to happen to me. Maybe not now but at some point. Must be a nice ride while it lasts though if you have the stock which sadly I don't.
post #35 of 47
Quote:
Originally Posted by Red Oak View Post

That is the gross margin. The 25% is their net income % after all expenses. It is what is used to calculate the P/E ratio. I believe the actual percentage was 28% last quarter

Gotcha. Sorry for the confusion.
post #36 of 47
Quote:
Originally Posted by TangoZulu View Post

Gotcha. Sorry for the confusion.

No problem!

Windows survivor - after a long, epic and painful struggle. Very long AAPL

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Windows survivor - after a long, epic and painful struggle. Very long AAPL

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post #37 of 47
Quote:
Originally Posted by cvaldes1831 View Post

AI never seems to point this out (MacRumors is now pointing out Gene Munster's unreliability), but Katy Huberty is one of the worst AAPL analysts and certainly isn't a star-rated analyst per StarMine.

AI readers should categorically toss all AI articles with references to Munster, Shaw Wu, Huberty, and a a few others into the circular bin.

Without the caveat emptor, they are worthless. As a matter of fact, it might be better to take an opposite position from what those "anal-ists" are predicting since they have garnered a track record in piss-poor accuracy.

She is cautious, like Apple's Mgmt, with the quarterly #s. Nothing to get in a huff about. If you read her research she has been bullish on Apple for several years.

Predicting quarterly earnings estimates is just a small part of the job of an equity analyst at a large Investment Bank.
post #38 of 47
Quote:
Originally Posted by Shaun, UK View Post

This reminds me a lot of the stock runs we used to read about in the last century.

Why do I get the feeling that the bankers/analysts are constantly talking up the stock to force it up and up before eventually they cut and run making huge profits in the process.

I know absolutely nothing about stocks and shares but this looks like a train crash waiting to happen to me. Maybe not now but at some point. Must be a nice ride while it lasts though if you have the stock which sadly I don't.

That much is very obvious from your post.

Stick to stuff you actually might know something about (not sure what that might be, though).
post #39 of 47
Quote:
Originally Posted by wizard69 View Post

Not to mention one slip up with a new product could be very negative. Especially with Apples reliance upon often one device per category. One iPad or iPhone release that generates a negative feeling in the buying community would result in sharp drop in price. Even a poorly received iMac release would not go over well.


So while Apple may be flying high right now their marketing habits leave them exposed to a negative side that few other companies need worry about. In other words Apple has the potential to swing in either direction dramatically. This should surprise no one.

Doomsday garbage. This stuff has been put to bed for over a decade now by Apple, yet the fear monger's still come out. Of course, when you're at the top, your every move is watched.... Apple have done just fine with it so far. A "product slip" won't affect them much at all, and cynics and contrarians ALWAYS try and shout loud when new Apple products are launched, however it's simply SALES that will affect Apple's future.

Quote:
Originally Posted by Constable Odo View Post

At this rate, Apple's share price might pass Google's share price by the end of the year.

Might even happen in a day or two. I think this is LONG OVERDUE, as Google still crazily trades at a higher multiple.

People: Stop focusing on Charts and all that garbage.... this is a classic fundamental story. Apple's Stock is simply playing "catchup" and it's STILL PERFORMING POORLY COMPARED TO THE COMPANY ITSELF!!!! This Stock should be over $700 at a minimum right now.

Quote:
Originally Posted by Shaun, UK View Post

This reminds me a lot of the stock runs we used to read about in the last century.

Why do I get the feeling that the bankers/analysts are constantly talking up the stock to force it up and up before eventually they cut and run making huge profits in the process.

I know absolutely nothing about stocks and shares but this looks like a train crash waiting to happen to me. Maybe not now but at some point. Must be a nice ride while it lasts though if you have the stock which sadly I don't.

I have a feeling that you don't own AAPL Shares and are upset about it? All due respect, you don't know what you're talking about on this particular subject. The fundamentals here are so in line, even at $960 a Share, AAPL would be technically undervalued (Forward P/E of well under 30).

As long as the Company keeps it moving, the Share price will break new cobwebs and follow. As BS'y and flip flop-y as Jim Cramer is, he said one thing right: One thing will dictate Apple's future: EARNINGS!!!! With the new iPad and the incredible initial demand, it looks like we hopefully have some insurance on that already.
post #40 of 47
So, closed the day at $589.58, +$21.48.

Wow.

But I do agree with those who say it is still undervalued, because it is.
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