Analysts: 'Stay the course with Apple,' $450 price target set

Posted:
in AAPL Investors edited January 2014
While traders on the Frankfurt DAX sent Apple shares sliding 6 percent today, similar to the drop that occurred in the US the last time Apple announced that its chief executive Steve Jobs was taking a leave of absence, US analysts expressed more confidence in Apple's market strength.



Brian White, the senior research analyst at Ticonderoga, noted in a report today that "With Steve Jobs as arguably the most iconic CEO in the world and widely recognized as the 'heart and soul' of Apple, we expect the stock to come under heavy selling pressure on Tuesday." US markets were closed today in observation of the Martin Luther King Jr holiday.



"If the stock goes into a significant downturn in the coming weeks on this news and/or further developments in the future," White added, "we believe Apple would be wise to tap into its $51 billion net cash position (as of the end of FY10; we estimate $70.8 billion by the end of FY11) for a significant stock repurchase or a generous cash dividend."



At the same time, White added, "Steve Jobs's health issues have long been a risk to the Apple story (e.g., and listed as a risk to our price target), and we believe one of the reasons the stock still only trades at just 15x (ex-cash) our CY11 EPS estimate, despite rapid growth and arguably the best product cycle in the tech world.



"Additionally, Steve Jobs deeply cares about his employees and the future of Apple; thus ,we believe he has been building a strong team that is able to successfully lead Apple into the future. Finally, Tim Cook's performance during Steve Jobs's medical leave in 2009 was excellent, highlighting Apple's strong bench.



"We believe 2011 will prove to be a great year for the fundamentals at Apple as the iPhone gains continued momentum and starts to tap into CDMA networks around the world. Also, we expect the iPad to start gaining mass adoption, while we anticipate the Mac product line to remain strong."



Ticonderoga maintained a buy rating, setting a price target of $450. Apple stock is currently at $348.



Tangible impact unlikely, perception may be a problem



A report by Reuters offered similar perspectives from other analysts, with Kaufman Bros. analyst Shaw Wu suggesting "a buying opportunity for investors." Wu was cited as saying, "Obviously the stock is going to get hit tomorrow. But I see no reason why this stock won't continue to work."



The report also cited Alexander Peterc, an equity analyst at Exane, as noting, "this will come as a surprise to Apple investors and definitely take some shine off the Apple stock. But even if Steve Jobs never returns to Apple, I would not expect a visible, tangible impact on how Apple is executing over the next couple of years."



Also cited was Richard Windsor, of Nomura Securities, who "agreed that Jobs' absence should not have a fundamental effect, but added: 'Perception of the company is another matter."



Windsor is particularly aware of the power of perception, having drafted reports in 2007 that claimed the original iPhone would likely suffer problems due to a faulty industrial design using ?a chemical deposition to provide touch sensitivity based on heat,? predicting that Apple might have to recall millions of faulty units.



The iPhone did not ever employ "touch sensitivity based on heat," instead being capacitive sensitive. That didn't stop Windsor from repeating the same prediction a year later with the iPhone 3G, this time referencing imagined problems in the phone?s Infineon chips.
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Comments

  • Reply 1 of 41
    Wow. One of the first times I've seen analysts do something with thought behind it.
  • Reply 2 of 41
    penchantedpenchanted Posts: 1,070member
    Finally, some reasoned commentary on the current issue with Jobs' health.
  • Reply 3 of 41
    cpsrocpsro Posts: 2,469member
    Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?
  • Reply 4 of 41
    Quote:
    Originally Posted by Cpsro View Post


    Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?



    I'd imagine so, Steve approves just about everything before it goes out. Apple needs to transition that process to other VPs.
  • Reply 5 of 41
    penchantedpenchanted Posts: 1,070member
    Quote:
    Originally Posted by Cpsro View Post


    Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?



    I doubt it. If anything, it is more likely the joint announcement was pushed out due to Jobs' unavailability. That could bode well since they said the delay would be "weeks, not months".
  • Reply 6 of 41
    sflocalsflocal Posts: 4,651member
    Quote:
    Originally Posted by iLoveStuff View Post


    I'd imagine so, Steve approves just about everything before it goes out. Apple needs to transition that process to other VPs.



    So what you're essentially saying is "I don't know, therefore I will guess?"



    SJ is taking a leave of absence. He's not out of the game and does not mean everything is halted. He's also still going to handle key decisions. So for whatever reason, the subscription method still needed some ironing out.
  • Reply 7 of 41
    I'll be holding on to my shares. With earnings due tomorrow after market close, a new iPad and iPhone in the works, plus some surprises, only a fool would bail.
  • Reply 8 of 41
    Perception is tuff to get by. However reality is that APPLE is well positioned going forward.

    Apple has over 50 billion sitting in cash, some of the best minds in the tech world, some of the greatest tech products on the planet as well as one of the best management teams in the world. Yes, Steve Jobs is the brains behind Apple, and yes we all wish Steve Jobs to get well soon and return! However lets all keep in mind that Steve has positioned Apple for a period under Tim Cook, Apple is ready for new products (ipad 2, Iphone5, etc) also Apple is ready to embark on CDMA around the world.

    Lets give Steve Jobs some peace of mind and face reality..........While the stock may initially sell off it will be back to $348 before you know it.



    GET WELL STEVE
  • Reply 9 of 41
    chris_cachris_ca Posts: 2,543member
    Quote:
    Originally Posted by Cpsro View Post


    Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?



    Most likey, yes.

    They are also holding up production of all other products.

  • Reply 10 of 41
    Quote:
    Originally Posted by Chris_CA View Post


    Most likey, yes.

    They are also holding up production of all other products.





    Let me second that
  • Reply 11 of 41
    solipsismsolipsism Posts: 25,726member
  • Reply 12 of 41
    Quote:
    Originally Posted by solipsism View Post


    [IMG][/IMG]



    A barfing smiley... wow.
  • Reply 13 of 41
    wijgwijg Posts: 99member
    If only the barf smileys were also barfing smileys...
  • Reply 14 of 41
    Quote:
    Originally Posted by AppleInsider View Post




    "Additionally, Steve Jobs deeply cares about his employees and the future of Apple; thus ,we believe he has been building a strong team that is able to successfully lead Apple into the future. Finally, Tim Cook's performance during Steve Jobs's medical leave in 2009 was excellent, highlighting Apple's strong bench.



    I have no doubt that Jobs has put his heart and soul into building a strong bench.



    But.......



    I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).



    I am in the wait-and-see mode with Cook.
  • Reply 15 of 41
    bagmanbagman Posts: 349member
    Quote:
    Originally Posted by anantksundaram View Post


    I have no doubt that Jobs has put his heart and soul into building a strong bench.



    But.......



    I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).



    I am in the wait-and-see mode with Cook.



    So.... you think Steve didn't have anything to do with these decisions? You must believe that the sitting President gets all the credit, or ire, of the land, depending on current conditions, as if they happened in a vacuum?



    Moving on from unfortunate circumstances is the hallmark of excellent management.



    When was the last time you saw Google or Microsoft fire anyone for poor performance or decisions, when the myriad of poor decisionmaking at each company cried out for Dr. Kevorkian?
  • Reply 16 of 41
    Quote:
    Originally Posted by anantksundaram View Post


    I have no doubt that Jobs has put his heart and soul into building a strong bench.



    But.......



    I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).



    I am in the wait-and-see mode with Cook.



    Papermaster was responsible for iPhone decisions so it appears he he might be the commonality to all three items. I doubt Tim Cook hired Papermaster; I think Jobs (and, maybe even, the BOD) made the hire.
  • Reply 17 of 41
    The problem is that AAPL is a leading stock. A trophy stock. Priced for perfection. The current price reflects the belief that nothing can go wrong. The price reflects a rich PE multiple.



    I believe that it doesnt matter how many iPhones or iPads Apple reports tomorrow.



    It is now about risk. And the PE multiple will contract. And the stock price will go down.



    But they do make great products.
  • Reply 18 of 41
    Quote:
    Originally Posted by solipsism View Post


    [IMG]barf[/IMG]



    This is the best reply in the history of ever.
  • Reply 19 of 41
    Quote:
    Originally Posted by sticknick View Post


    This is the best reply in the history of ever.



    Which is obviously a very long time.
  • Reply 20 of 41
    tundraboytundraboy Posts: 1,617member
    Quote:
    Originally Posted by muckdog View Post


    The problem is that AAPL is a leading stock. A trophy stock. Priced for perfection. The current price reflects the belief that nothing can go wrong. The price reflects a rich PE multiple.



    I believe that it doesnt matter how many iPhones or iPads Apple reports tomorrow.



    It is now about risk. And the PE multiple will contract. And the stock price will go down.



    But they do make great products.



    Can you list down the PE ratios of Apple, Amazon, Google, Microsoft, HP, and other major tech players then make a sound, reasoned analysis of why the PE ratios of these companies are the way they are?



    And the current price of AAPL reflects the belief that nothing can go wrong? Really now, how do you know that? Did you talk to a lot of stockholders and they told you that they believe that nothing can go wrong? Or is that just your opinion? A lot of analyst talk are all ex-post narratives made up to fit the observed numbers. But if you look at the b.s. they say ex-ante, they're really not that good at predicting things. And that's really no surprise. Because if you're really good at predicting stock prices, then you'll keep your predictions to yourself and just make tremendous sums of money playing the stock market.



    "It's now about risk." When the hell has investing in the stock market not been about risk?



    "And the stock price will go down." No shit Sherlock. Probably the most hands-on CEO in America takes a leave because of serious illness and we need the Oracle of Delphi to tell us that his company's stock will probably take a hit?



    Amazing the gobbledygook that people come up with to explain stock prices.
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