Needham ups Apple price target to $750 following recent surge
With three record high closing days in the last week, Apple's recent stock surge, along with continued strong sales by the company, have prompted Needham & Co. to increase their 12-month price target to $750.
Analyst Charlie Wolf only revises his price target for AAPL semi annually. Because of that, his 12-month price target prior to Wednesday was $620, or more than $30 below the price at which AAPL stock opened.
The new target of $750 is beyond the company's record share price of $665 reached earlier this week. The company's shares have nearly doubled in value from their 52-week low of $356.44.
Wolf said his price target increase is in response to across-the-board upward revisions in all of Apple's businesses. Each of Apple's different business segments is given a dollar value per share, and in his mind the iPhone accounts for $323.20, or 43.1 percent, of AAPL's projected $750 price.
Needham's new price target was driven largely by the iPhone, with a dollar-per-share value increase of $60.08 accounting for 42.4 percent of the increase. The value of the Macintosh platform was increased by $14.04 to $100.50, accounting for 13.4 percent of the projected share price, while the iPad grew $22.02 to $109.94, taking 14.7 percent of the forecasted value.
"The unique feature of our model is that the growth in Mac sales is driven solely by the halo effects emanating from the iPhone and iPad," Wolf explained. "Changes in our forecast of iPhone and iPad sales, then, also impact Mac sales as well as software and peripheral sales."
The analyst noted that Apple remains a relatively small player in two major markets: smartphones and personal computing. Wolf's projections call for the iPhone to account for 22 percent of smartphone sales this year, while he believes the Mac's marketshare will grow from 4.8 percent in 2011 to 11.3 percent in 2021.
Wolf also noted that Needham's price target adjustments over the last four years have not kept pace with the growth in Apple's earnings. Since 2008, Needham's price target has increased 220 percent, but Apple's earning have grown by 545 percent.
"Are we succumbing, like investors, to the law of large numbers?" he asked.
Analyst Charlie Wolf only revises his price target for AAPL semi annually. Because of that, his 12-month price target prior to Wednesday was $620, or more than $30 below the price at which AAPL stock opened.
The new target of $750 is beyond the company's record share price of $665 reached earlier this week. The company's shares have nearly doubled in value from their 52-week low of $356.44.
Wolf said his price target increase is in response to across-the-board upward revisions in all of Apple's businesses. Each of Apple's different business segments is given a dollar value per share, and in his mind the iPhone accounts for $323.20, or 43.1 percent, of AAPL's projected $750 price.
Needham's new price target was driven largely by the iPhone, with a dollar-per-share value increase of $60.08 accounting for 42.4 percent of the increase. The value of the Macintosh platform was increased by $14.04 to $100.50, accounting for 13.4 percent of the projected share price, while the iPad grew $22.02 to $109.94, taking 14.7 percent of the forecasted value.
"The unique feature of our model is that the growth in Mac sales is driven solely by the halo effects emanating from the iPhone and iPad," Wolf explained. "Changes in our forecast of iPhone and iPad sales, then, also impact Mac sales as well as software and peripheral sales."
The analyst noted that Apple remains a relatively small player in two major markets: smartphones and personal computing. Wolf's projections call for the iPhone to account for 22 percent of smartphone sales this year, while he believes the Mac's marketshare will grow from 4.8 percent in 2011 to 11.3 percent in 2021.
Wolf also noted that Needham's price target adjustments over the last four years have not kept pace with the growth in Apple's earnings. Since 2008, Needham's price target has increased 220 percent, but Apple's earning have grown by 545 percent.
"Are we succumbing, like investors, to the law of large numbers?" he asked.
Comments
Quote:
Originally Posted by AppleInsider
Analyst Charlie Wolf only revises his price target for AAPL semi annually. Because of that, his 12-month price target prior to Wednesday was $620, or more than $30 below the price at which AAPL stock opened. The new target of $750 is beyond the company's record share price of $665 reached earlier this week......
Try to stay ahead of the curve, Charlie.
I don't know anything about financial analysis but even I know AAPL deserves a LOT more than 23 cents in the Fudge Factor category. I mean it went DOWN .2% (???!).
That's a cowardly and pathetic prediction.
Apple was recently right around $675 and the recent surge happened really quick, in a matter of days. So, twelve months from now, an analyst is predicting just $75 up from Apple's recent high?
AAPL can reach $750 long before a full year passes. Who knows, maybe next month is $700+ territory for AAPL, with the new iPhone, iPad and all. AAPL will be at at least $1000 when all of the lame analysts were predicting prices around $750. AAPL will have to perform very poorly to be at $750 in August 2013.
Quote:
Originally Posted by Apple ][
That's a cowardly and pathetic prediction.
Apple was recently right around $675 and the recent surge happened really quick, in a matter of days. So, twelve months from now, an analyst is predicting just $75 up from Apple's recent high?
AAPL can reach $750 long before a full year passes. Who knows, maybe next month is $700+ territory for AAPL, with the new iPhone, iPad and all. AAPL will be at at least $1000 when all of the lame analysts were predicting prices around $750. AAPL will have to perform very poorly to be at $750 in August 2013.
Yes, but there is also some uncertainty that could negatively affect the AAPL price:
the Sammy trial
the attempted Google Motorola product ban
the economy in general
the elections
the potential for capital gains rate hikes
We could easily see AAPL at $700 next month -- but it might not maintain that level by year's end.
At one point this year, Apple's P/E had grown to 18.3. It presently sits at 15.7 - and an all-time high. That's how incredible Apple's earnings have been this year, compressing more than two and a half points off the P/E ratio. And while the present quarter will be its lowest earnings quarter of the fiscal year, that's merely the difference between great and spectacular.
And it's all about to happen again next year. It doesn't take a rocket scientist to see that a price target of $750/share is just ridiculous.
The Samsung trial at worst would be a draw. There will be no negative effect on earnings from it. If they win, of course, earnings will be increased by the amount of the award.
The Google Motorola ban won't even be a possibility for a year or more, and its far more likely to end in a settlement than an actual trial if there is in fact patent interference occurring.
The economy, most economists agree, is not going into a double-dip. That would be the only thing that would slow Apple down.
The elections won't effect Apple's earnings.
Apple's earnings growth swamps any possible advantage to "locking in" a capital gain advantage unless the basis of a given stock purchase is extremely low. Once people figure that out, there will be little movement out of Apple. I wouldn't say the same for any other company.
Quote:
Originally Posted by Sacto Joe
Quote:
Originally Posted by Dick Applebaum
Yes, but there is also some uncertainty that could negatively affect the AAPL price:
the Sammy trial
the attempted Google Motorola product ban
the economy in general
the elections
the potential for capital gains rate hikes
We could easily see AAPL at $700 next month -- but it might not maintain that level by year's end.
The Samsung trial at worst would be a draw. There will be no negative effect on earnings from it. If they win, of course, earnings will be increased by the amount of the award.
The Google Motorola ban won't even be a possibility for a year or more, and its far more likely to end in a settlement than an actual trial if there is in fact patent interference occurring.
The economy, most economists agree, is not going into a double-dip. That would be the only thing that would slow Apple down.
The elections won't effect Apple's earnings.
Apple's earnings growth swamps any possible advantage to "locking in" a capital gain advantage unless the basis of a given stock purchase is extremely low. Once people figure that out, there will be little movement out of Apple. I wouldn't say the same for any other company.
I appreciate your long term optimism in AAPL -- I have similar beliefs.
I don't agree that the worst outcome of the Sammy trial would be a draw -- we're talking about a jury... though, I suppose, the judge could issue a directed verdict.
The elections will, likely, determine whether the capital gains rate is doubled or not.
Some of us have been averaging up for years -- I still have my initial shares purchased at $17 in 2003. I have gifted some of my holdings to my daughter and now am considering the same for my grand children. Most of the shares in my daughters account were purchased below $250
In 3 years, my daughter (full-time Mom) will have to make a decision on her house (SF East Bay) -- it's not underwater but has little net value. If she decides to sell, she will, likely, sell stock to purchase another house with 50% plus down to get a low monthly mortgage. If the capital gains rate doubles, it might be to her advantage to sell stock this year, and buy that new house.
So, for some of us, timing, the elections, the economy (especially housing) and capital gains rates are a big deal.
The trial will be over shortly now, and that variable will be removed. But in no possible outcome do I see a degradation of Apple's earning capability.
As concerns cap gains, the issue will always involve a large number of unknowns. If you have to sell, you have to sell, but timing it so you maximize return won't be easy. Still, that's a great problem to have!
The real question with cap gains tax and AAPL is more for those who are trying to figure if it would be better to sell and rebuy to lock in a lower basis going forward, in effect trading a lower tax rate for fewer shares. With your extremely low basis it makes sense to consider this, but even at, say, a purchase price of $250, if Apple appreciates just 25% a year for the next four years, and the cap gain tax rate doubles to 30%, you'd be better off holding all your shares for those four years.
Quote:
Originally Posted by Sacto Joe
Quote:
Originally Posted by Dick Applebaum
I appreciate your long term optimism in AAPL -- I have similar beliefs.
I don't agree that the worst outcome of the Sammy trial would be a draw -- we're talking about a jury... though, I suppose, the judge could issue a directed verdict.
The elections will, likely, determine whether the capital gains rate is doubled or not.
Some of us have been averaging up for years -- I still have my initial shares purchased at $17 in 2003. I have gifted some of my holdings to my daughter and now am considering the same for my grand children. Most of the shares in my daughters account were purchased below $250
In 3 years, my daughter (full-time Mom) will have to make a decision on her house (SF East Bay) -- it's not underwater but has little net value. If she decides to sell, she will, likely, sell stock to purchase another house with 50% plus down to get a low monthly mortgage. If the capital gains rate doubles, it might be to her advantage to sell stock this year, and buy that new house.
So, for some of us, timing, the elections, the economy (especially housing) and capital gains rates are a big deal.
The trial will be over shortly now, and that variable will be removed. But in no possible outcome do I see a degradation of Apple's earning capability.
As concerns cap gains, the issue will always involve a large number of unknowns. If you have to sell, you have to sell, but timing it so you maximize return won't be easy. Still, that's a great problem to have!
The real question with cap gains tax and AAPL is more for those who are trying to figure if it would be better to sell and rebuy to lock in a lower basis going forward, in effect trading a lower tax rate for fewer shares. With your extremely low basis it makes sense to consider this, but even at, say, a purchase price of $250, if Apple appreciates just 25% a year for the next four years, and the cap gain tax rate doubles to 30%, you'd be better off holding all your shares for those four years.
That's pretty savvy reasoning... and yes, we've backed ourselves into a cap gains corner... but it is a great place to be.
I hear you on the 25% growth... pretty good bet! It would be really great, though, if we could make plans that were the results of our own research, efforts and risks and not be subject to... I an reminded of the Merchant Of Venice:
Quote:
Antonio. Believe me, no: I thank my fortune for it,
My ventures are not in one bottom trusted,
Nor to one place; nor is my whole estate
Upon the fortune of this present year:
Therefore my merchandise makes me not sad.