Firm sets whopping $205 price target on Apple shares

Posted:
in General Discussion edited January 2014
Piper Jaffray on Friday hiked its price target on shares of consumer electronics maker Apple Inc. to $205, explaining that a newly developed model for booked iPhone revenues reveals substantial upside to his 2009 calendar year earnings estimates.



"In 12 months, shares of Apple will be trading on calendar year 2009 (CY09) numbers and therefore we are using CY09 numbers to set our 12 month price target," analyst Gene Munster told clients. "While it is early to be using '09 numbers, we believe that as '09 comes into focus, investors will start to put numbers around Apple's booked revenue metric."



Munster's published CY09 per-share earnings estimate currently sits at $4.82, but the inclusion of both the booked revenue methodology and ATT revenue share would bump that guesstimate to $7.31 per share, he said.



"Applying a 28x multiple on $7.31 leads to a $205 price target," the analyst wrote. "Our target multiple of 28x is in line with the three-year average price/earnings multiple based on two-year forward earnings-per-share."



Munster emphasized that his revised target is based on Apple's ability to sell 45 million iPhone units in 2009 but has little to do with iPhone sales in 2007 and 2008.



"One thing we learned with the iPod is that when a device is game-changing, the demand will come," he advised clients. "However, it is difficult to predict the inflection point. For example, in December 2004, Street expectations for iPod ran wild with investors anticipating 8 million iPods, but Apple only sold 4.6 million. It was feared at the time that the iPod would never go mainstream."



The analyst added that the value of Apple shares 12 months from now will largely dependent on whether the Street believes the company can sell 45 million iPhones in 2009 for an average price of $330.



"Conversations with investors over the past month suggest awareness of potential for iPhone units is high, but awareness of potential resulting impact to earnings is low," he wrote. "If Apple can sell 45 million units in CY09, the earnings power and historical multiple ranges suggest our price target is reasonable."
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Comments

  • Reply 1 of 107
    mauimacmauimac Posts: 26member
    "xplaining that a newly developed model for booked iPhone revenues reveals substantial upside to his 2009 calendar year earnings estimates."





    ...or maybe he just wants to push the price of AAPL up so he can make some $$$...
  • Reply 2 of 107
    melgrossmelgross Posts: 33,030member
    Quote:
    Originally Posted by MauiMac View Post


    "xplaining that a newly developed model for booked iPhone revenues reveals substantial upside to his 2009 calendar year earnings estimates."





    ...or maybe he just wants to push the price of AAPL up so he can make some $$$...



    No.
  • Reply 3 of 107
    SpamSandwichSpamSandwich Posts: 33,408member
    What's their game here? Obvious... pump and dump.
  • Reply 4 of 107
    backtomacbacktomac Posts: 4,579member
    45 million iPhones in 09 seems very optimistic.



    I can't see it happening without 1 or 2 more iPhone models.



    Still Munster is a respected Apple analyst.
  • Reply 5 of 107
    melgrossmelgross Posts: 33,030member
    Quote:
    Originally Posted by SpamSandwich View Post


    What's their game here? Obvious... pump and dump.



    Ah, I love the unfounded cynicism.
  • Reply 6 of 107
    tinktink Posts: 395member
    pass the dutchie left hand side
  • Reply 7 of 107
    SpamSandwichSpamSandwich Posts: 33,408member
    Quote:
    Originally Posted by melgross View Post


    Ah, I love the unfounded cynicism.



    Hey, I'd love to believe Apple hits this $205 target, but seriously... are you looking at the same growth I am?
  • Reply 8 of 107
    jeffdmjeffdm Posts: 12,951member
    Quote:
    Originally Posted by tink View Post


    pass the dutchie left hand side







    Quote:
    Originally Posted by SpamSandwich View Post


    Hey, I'd love to believe Apple hits this $205 target, but seriously... are you looking at the same growth I am?



    Do you mean the one on your arm? J/K.



    I'm a bit on the fence about this one, but I think Apple's stock price grew more than that difference the first half of this year. Whether it will continue that far is anyone's guess. I think it's probably a tad optimistic, though not impossible.
  • Reply 9 of 107
    melgrossmelgross Posts: 33,030member
    Quote:
    Originally Posted by SpamSandwich View Post


    Hey, I'd love to believe Apple hits this $205 target, but seriously... are you looking at the same growth I am?



    I don't know what you're looking at.



    If Apple can hit $23.5 billion this year, which looks to be somewhat conservative, and hit $28 to 29 billion 2008 end of year, they could also hit around $35 billion 2009 end of year.



    If profits keep up with sales growth, and the phone sells well, then I don't see that number as being out of the ballpark. It's less than 50% higher than today's number.



    But, it also depends on the market not imploding.
  • Reply 10 of 107
    ptrashptrash Posts: 296member
    Quote:
    Originally Posted by melgross View Post


    I don't know what you're looking at.



    If Apple can hit $23.5 billion this year, which looks to be somewhat conservative, and hit $28 to 29 billion 2008 end of year, they could also hit around $35 billion 2009 end of year.



    If profits keep up with sales growth, and the phone sells well, then I don't see that number as being out of the ballpark. It's less than 50% higher than today's number.



    But, it also depends on the market not imploding.



    And Mel Gross's pace of posting not imploding! You're approaching 10,000 posts. At a conservative 3 minutes per post--two minutes to read the topic and previous posts, 30 seconds to type a response and 30 seconds of processing time (computer AND human)--that's about 500 hours, about a quarter of a year. Shit, over 3 years that's almost a month vacation time per! I think AI should give an award for the 10k milestone--10 share of Appl, maybe? If it was legal, the logical donor would be Apple--look at all the free publicity they get!.



    PS At the rate I type, read and think (and my G4 Ibook and TWC process!), it'd take me a hundred years to reach 10k posts. Props to you!
  • Reply 11 of 107
    ajhillajhill Posts: 81member
    Look back at the last five years of AAPL share prices. It has gone up 1,000% in the last five years.



    So to believe that the stock could go up 50% in the next 2.5 years is not optimistic. If anything its pessimistic. That's why Apple shares are going up. Apple has grown 1,000 in the last five years based mostly on iPod revenue. iPhone revenue was not part of that impressive growth. Combine iPod, Iphone, iTunes Music Store, New OSX Leopard release, Christmas, AppleTV(Don't right this one off yet, it will come back strong when Apple releases the firmware update to enable HD Movie RENTALS!)



    With all those catalysts a rise of $65 in share price in 2.5 years seems like a low estimate. We'll look back and wonder why we didn't buy more.
  • Reply 12 of 107
    jeffdmjeffdm Posts: 12,951member
    Quote:
    Originally Posted by ajhill View Post


    Look back at the last five years of AAPL share prices. It has gone up 1,000% in the last five years.



    So to believe that the stock could go up 50% in the next 2.5 years is not optimistic. If anything its pessimistic. That's why Apple shares are going up. Apple has grown 1,000 in the last five years based mostly on iPod revenue. iPhone revenue was not part of that impressive growth. Combine iPod, Iphone, iTunes Music Store, New OSX Leopard release, Christmas, AppleTV(Don't right this one off yet, it will come back strong when Apple releases the firmware update to enable HD Movie RENTALS!)



    With all those catalysts a rise of $65 in share price in 2.5 years seems like a low estimate. We'll look back and wonder why we didn't buy more.



    The $205 price target given is for 12 months from now, not 2.5 years from now.
  • Reply 13 of 107
    SpamSandwichSpamSandwich Posts: 33,408member
    Quote:
    Originally Posted by JeffDM View Post


    The $205 price target given is for 12 months from now, not 2.5 years from now.



    Exactly. Seems way too optimistic, although I remain hopeful.
  • Reply 14 of 107
    SpamSandwichSpamSandwich Posts: 33,408member
    Quote:
    Originally Posted by melgross View Post


    I don't know what you're looking at.



    If Apple can hit $23.5 billion this year, which looks to be somewhat conservative, and hit $28 to 29 billion 2008 end of year, they could also hit around $35 billion 2009 end of year.



    If profits keep up with sales growth, and the phone sells well, then I don't see that number as being out of the ballpark. It's less than 50% higher than today's number.



    But, it also depends on the market not imploding.



    BTW, thanks for the CLWR suggestion!
  • Reply 15 of 107
    tinktink Posts: 395member
    Quote:
    Originally Posted by tink View Post


    pass the dutchie left hand side



    Joking aside, Apple is truly firing on all cylinders and delivering. I actually do believe this is just the beginning of the fruit from the convergence model Apple has been working consistently on all these years.
  • Reply 16 of 107
    polar315polar315 Posts: 76member
    Think about that company out of Waterloo, Ont



    RIMM



    http://finance.yahoo.com/charts#char...urce=undefined



    Killer technology for tech addicts....
  • Reply 17 of 107
    jasenj1jasenj1 Posts: 922member
    Doesn't Apple sell computers? I think I read that somewhere or heard it on a podcast I was listening to on my iPod.



    In all seriousness, I believe Apple continues to grow on the computer sales side faster than the market in general. If they can keep their refresh cycle in sync with the rest of the manufacturers, and keep the OS updates coming, they have a good outlook for growth in that sector, too.



    This whole iPod and iPhone craze is still disconcerting to me. "Dog, meet tail. Now wag."



    - Jasen.
  • Reply 18 of 107
    Quote:
    Originally Posted by jasenj1 View Post


    Doesn't Apple sell computers? I think I read that somewhere or heard it on a podcast I was listening to on my iPod.



    In all seriousness, I believe Apple continues to grow on the computer sales side faster than the market in general. If they can keep their refresh cycle in sync with the rest of the manufacturers, and keep the OS updates coming, they have a good outlook for growth in that sector, too.



    This whole iPod and iPhone craze is still disconcerting to me. "Dog, meet tail. Now wag."



    - Jasen.



    Good point - from what I can see, this earnings forcast is essentially based entirely on the iPhone...I wonder if Munster took the iPhone's coattail effect into account when he wrote his analysis. The outrageous amounts of media attention the iPhone received had to be partially responsible for the increase in Mac sales last quarter.
  • Reply 19 of 107
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by SpamSandwich View Post


    BTW, thanks for the CLWR suggestion!



    hehe I thanked him yesterday. Up about 45% in a little over a month.



    Quote:
    Originally Posted by polar315 View Post


    Think about that company out of Waterloo, Ont



    RIMM



    http://finance.yahoo.com/charts#char...urce=undefined



    Killer technology for tech addicts....



    They are doing well. Some of which I can't understand. I know the iPhone will not replace the Blackberry but RIMM jumping 30% on June 29th and an average of 4% gains per day seems a little odd. Way to go Research In Motion!
  • Reply 20 of 107
    Hi guys! I'm new to the appleinsider forum!



    Anyways, just wanted to share my view ...



    I have been an Apple fan since the early 90's ... and I am so happy to see that Apple is finally being seen and recognized for its forward thinking.



    I strongly believe that Apple is the next Microsoft (should have been this way long ago).



    My theory is simple, MS got lucky early ... got people used to its product and kept copying Apple's innovation to stay ahead ... Apple has finally broke through the pack and taken a huge lead ....



    Thanks to iPod people I realizing that Apple products are not only easy to use but elegant ... so now people will slowly switch to Apple ... and they won't be disappointed.



    Apple might even surpass $200 before Christmas ... mark my word!!



    Peace!
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