FBR Capital Markets gives Apple trillion-dollar valuation with $185 price target

Posted:
in AAPL Investors edited April 2015
Investment bank FBR this week rated Apple stock with a massive $185 price target, forecasting that the iPhone maker will eventually become the world's first corporation valued at $1 trillion.




In a memo supplied to AppleInsider, FBR analyst Daniel Ives argued that Apple's main strength is actually its closed software ecosystem, since mobile hardware is becoming "increasingly commoditized," and a closed system helps drive shoppers into picking Apple electronics and services. In the long-term however FBR says that its optimistic appraisal is based on three main factors, including a greater emphasis on services, rising mobile sales in China, and "upside" from new device categories such as the Apple Watch.

Services are in fact claimed to be Apple's "secret sauce." FBR estimates that profit margins on Apple services are over 90 percent after concent costs, and that by the company's 2017 fiscal year, they could form 32 percent of overall profits. By comparison, services are projected to make up just 12 percent of 2015 profits.

Apple is in the "early days" of services such as the App Store, Apple Pay, and streaming TV, the memo remarked. Apple is rumored to be working on TV subscription packages that could launch late this year.

Another potential growth area in FBR's view is the enterprise world. Trends toward BYOD (bring your own device) support may spur iPhone and iPad sales, as could a growing number of productivity apps, including those developed jointly by Apple and IBM.
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Comments

  • Reply 1 of 27
    mubailimubaili Posts: 383member
    SJ "that is not why our customers bought our products; that is not why we come to work out ass off everyday ".
  • Reply 2 of 27
    rmb0037rmb0037 Posts: 142member
    The article is fantastic and whatnot, but man...that ?watch in the photo is...just gorgeous.
  • Reply 3 of 27
    apple ][apple ][ Posts: 8,360member

    $185 sounds good to me!

     

    By the way, where is the news article about the Apple fan and the Fandroid who were roommates and who were arguing with each other about which phone is best, and then they began stabbing each other!<img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    The link doesn't say who won, but my money is on the Apple fan, because the Apple fan probably spent a few bucks for their stainless steel knife, while the Fandroid ended up using a plastic knife that they got with their takeout dinner last night, because it was free.

     

    Dumb: Smartphone Debate Ends With Stabbings 

    Apple vs. Android argument turned violent, police report

    http://www.thesmokinggun.com/documents/stupid/smartphone-debate-ends-with-stabbings-908541

  • Reply 4 of 27

    This 'analysis' is not about Apple.  It's just about this analyst tried to promote himself.

     

    Unfortunately, the only thing his analysis shows is that he is capable of dividing $1Trillion by the number of public shares and rounding to 5.

  • Reply 5 of 27
    mdriftmeyermdriftmeyer Posts: 7,185member
    mubaili wrote: »
    SJ "that is not why our customers bought our products; that is not why we come to work out ass off everyday ".

    Butchering the English language is how come we to work out ass off everyday.
  • Reply 6 of 27
    cash907cash907 Posts: 893member
    How is he expecting 185 when Apple is squarely sitting at 124, and the highest it's seen is 133 in the last year? Apple stock has been growing at a rate of 10% per year, which is fine in my book. Releasing junk predictions like this, however, introduce false expectations that ultimately hurt the stock price when they aren't met.
  • Reply 7 of 27
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by Cash907 View Post



    How is he expecting 185 when Apple is squarely sitting at 124, and the highest it's seen is 133 in the last year? Apple stock has been growing at a rate of 10% per year, which is fine in my book. Releasing junk predictions like this, however, introduce false expectations that ultimately hurt the stock price when they aren't met.



    Where do you get 10% per year from?

     

    One year ago today, AAPL was about $75. At this moment, it's $124.61. That's a pretty nice increase for 12 months, and a whole lot more than 10%.

  • Reply 8 of 27
    512ke512ke Posts: 781member

    One reason AAPL could very well jump to 185 is because it's been consistently undervalued.

     

    The iPhone 6 proved that Apple could meaningfully grow its phone business, at the expense of Android and Samsung's high end offerings mostly (i.e. the high end phone market was not "saturated" as many analysts had been claiming for a while).

     

    The Apple Watch is proving that Apple can grow into new products and areas of business (regardless of the dollar figures, it shows that Apple has a LOT of life beyond the iPhone).

     

    And then we look at the declining iTunes business... but that's being MORE than offset by the exploding App Store business.

     

    Oh, and then we look at APPL's growing dividends coming out of Apple's huge cash influx.

     

    I think it all adds up to APPL continuing to grow, personally. 

     

    The analysts managed to spin Apple negatively and keep the stock down for a while, but eventually, cream rises to the top.

     

    Next prediction: Samsung's touted blockbuster Galaxy Edge and phone sales of new models will prove to be a misleading flop with sales actually LESS than previous offerings.

  • Reply 9 of 27
    aderutteraderutter Posts: 225member
    Targets are nice but it helps if there's a timeframe.
    The article mentions 2017 but for all I know the target timescale could be 2020.
    My personal target is a whole lot larger than $185 but my timescale is 8 years for the first 25% of my stock and at least 10 years later for the remainder :)
    Yes I could sell now having made a massive (to me) profit but then what would I buy?
    And if I left it in cash it'd just erode with inflation.
    And it's only money anyway, so I'll stick with what I know and love : AAPL
  • Reply 10 of 27
    mubaili wrote: »
    SJ "that is not why our customers bought our products; that is not why we come to work out ass off everyday ".

    It isn't. But financial success is a welcome side-effect of what they do to change the world.
  • Reply 11 of 27
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Apple is up about 70% in the last 12 months.

     

    Not sure what you are smoking son.




    I'm smoking some pretty good stuff, but even I know that AAPL is up a whole lot since a year ago.

  • Reply 12 of 27
    lkrupplkrupp Posts: 6,530member
    Quote:

    Originally Posted by AppleInsider View Post



    Investment bank FBR this week rated Apple stock with a massive $185 price target, forecasting that the iPhone maker will eventually become the world's first corporation valued at $1 trillion.

     

    Some jackwad at Business Insider has already pointed out that the Dutch East India Company in 1637 would have a market cap of $7.4 Trillion adjusted for 2012 dollars. So Apple is still an epic fail. Sorry fanboys, or so they say. /s

     

    http://www.businessinsider.com/apples-market-cap-in-fx-inflation-adjusted-context-2015-2

  • Reply 13 of 27
    SpamSandwichSpamSandwich Posts: 30,417member
    lkrupp wrote: »
    Some jackwad at Business Insider has already pointed out that the Dutch East India Company in 1637 would have a market cap of $7.4 Trillion adjusted for 2012 dollars. So Apple is still an epic fail. Sorry fanboys, or so they say. /s

    http://www.businessinsider.com/apples-market-cap-in-fx-inflation-adjusted-context-2015-2

    BusinessInsider...bastion of accuracy and completely bias-free! ???? /s
  • Reply 14 of 27
    lkrupplkrupp Posts: 6,530member
    Quote:

    Originally Posted by sog35 View Post

     

    Business Insider is the worst.  Just keep in mind their CEO/Founder is a criminal.

     

     


     

    Hence the /s in my post. But it’s a good example of the alternate universe in which the typical iHater lives, totally disconnected from rational thinking.

  • Reply 15 of 27
    phone-ui-guyphone-ui-guy Posts: 1,018member
    Quote:

    Originally Posted by Rmb0037 View Post



    The article is fantastic and whatnot, but man...that ?watch in the photo is...just gorgeous.

     

    Sure looks like a blue sport band... Must be heavily photoshopped.

  • Reply 16 of 27
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by Phone-UI-Guy View Post

     

     

    Sure looks like a blue sport band... Must be heavily photoshopped.




    Either that, or maybe it's one of those special models that is made for some celebrity that is unavailable to peasants.

  • Reply 17 of 27
    Quote:

    Originally Posted by Apple ][ View Post

     



    I'm smoking some pretty good stuff, but even I know that AAPL is up a whole lot since a year ago.


     

    Yeah, and it was down a lot the year before that. We're talking YOY average change.

  • Reply 18 of 27
    dr millmossdr millmoss Posts: 5,403member

    So FBR is empowered to "give" Apple a $1 trillion market valuation? Wow. What are they waiting for?

  • Reply 19 of 27
    iaeeniaeen Posts: 588member
    Quote:

    Originally Posted by PotatoLeekSoup View Post

     

     

    Yeah, and it was down a lot the year before that. We're talking YOY average change.




    Dec 31, 2004 -> $4.635 (adjusted for splits)

    Dec 1, 2014 -> $118.81

    (opening price, source: yahoo finance)

     

    Modeling as continual growth; Average return over 10 year period: ~32.4%/year

     

    Whoever says it's 10% is either insane or a blatant troll.

  • Reply 20 of 27
    irun262irun262 Posts: 121member
    lkrupp wrote: »
    Hence the /s in my post. But it’s a good example of the alternate universe in which the typical iHater lives, totally disconnected from rational thinking. I’m thinking of all the Benjamin Frost posts.
    Where is he?
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