Citigroup hikes Apple target to $287, Lehman to $234

Posted:
in General Discussion edited January 2014
Having digested Apple's iPhone 3G announcements from Monday, analysts at both Citigroup and Lehman Brothers have sharply raised their 12-month price targets for the electronics maker.



"We remain aggressive buyers of Apple shares at current levels," said Citigroup analyst Rich Gardner, who raised his price target on the Cupertino-based firm from $248 to $287. "Apple's decision to move from a revenue shareÂ*model to a traditional subsidy model for the 3G iPhone is aÂ*significant positive because Apple receives iPhone-relatedÂ*cash flow sooner. "



As a result, the analyst boosted his fiscal 2009 and fiscal 2010Â* free cash flow estimates from $7.4B andÂ*$8.9B to $9.3B and $10.2B, respectively, but noted the change in carrier model will likely have little net impact to his already above-consensus GAAP per-share earnings estimates. The shift in carrierÂ*payments to the point of sale should, however, boosts fiscal 2009 and fiscal 2010Â* revenue by $1.4B-3.2B, he said. Â*



Gardner also cited fellow Citi wirelessÂ*analyst Michael Rollins, who believes that AT&T is paying AppleÂ*$220-$270 more for the 3G iPhone than the Net Present Value of allÂ*revenue sharing payments related to the original iPhone. "AT&T obviously believes thatÂ*the higher upfront investment will pay off in higherÂ*subscriber adds, higher average revenue per unit, and lower churn," he said.



Separately, Lehman Brothers analyst Ben Reitzes also raised his price target on Apple shares to $234 from $202, saying he viewed the company's announcements Monday as positive for the stock due primarily to the new $199 price point for the 3G iPhone and its ability to drive multiple revenue streams within the company



"We believe weakness in the stock initially was a combination of a 'sell on news' reaction and some concerns about the product shipping about 2 weeks later than we expected," he wrote in a note to clients. "Also, we believe there is some confusion about the altered iPhone business model. We would use weakness in shares to accumulate the stock given Apple is creating a top of the line mobile community with multiple revenue streams that we believe should benefit investors over the long-term."



Given limited availability of the first-generation iPhone and the fact that Apple has pushed out the first shipments of its new iPhone to July, Reitzes now estimates the company will sell just 710,000 iPhones during its current fiscal third quarter of 2008 scheduled to end later this month. However, he's estimating sales of 3.6 million 3G iPhones during the fiscal fourth quarter ending September and 23 million during fiscal 2009.



"We believe focusing on the minutiae around shared average revenue per unit streams (just like earlier this year) misses the big picture impact of the significant growth in iPhone units and the ripple effect on the rest of the company," he wrote.
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Comments

  • Reply 1 of 29
    Will be buying iPhone 3G AND am adding to my AAPL position
  • Reply 2 of 29
    sequitursequitur Posts: 1,901member
    Cramer on TV claims that we should sell AAPL stock prior to the iPhone hitting the stores.

    Any thoughts?
  • Reply 3 of 29
    maivmaiv Posts: 5member
    Quote:
    Originally Posted by sequitur View Post


    Cramer on TV claims that we should sell AAPL stock prior to the iPhone hitting the stores.

    Any thoughts?



    i know jim cramer is very bright, much more than i could ever hope to be, but some of his comments on apple doesn't make sense to me. i distinctly recall an article where the author stated that his portfolio did NOT perform as well as one would expect.



    someone did a review of his book and said what he wrote in the book is complete different from what he raves about on TV.
  • Reply 4 of 29
    Quote:
    Originally Posted by sequitur View Post


    Cramer on TV claims that we should sell AAPL stock prior to the iPhone hitting the stores.

    Any thoughts?



    Save your time and stop watching or listening to Cramer on anything. He is so up and down on Apple stock or for that matter on anything. He has lost his ability to pick stocks, not saying I'm an expert, but that's not my job.



    Here in this article on January 2, 2008, http://seekingalpha.com/article/5874...tions-for-2008, he predicted Apple will hit $300 and Google will hit $1000 by the end of 2008.



    Here on January 23, 2008, http://www.thestreet.com/video/index..._ite=#10400042 he said you've had your chance with Apple stock. Don't sell, but don't buy.



    Here on April 21, 2008, http://blogs.zdnet.com/Apple/?p=1601, he said buy it up.



    Now, he is saying sell. He makes no sense.



    My personal opinion, like it matters, is Apple is one of the best long-term investments possible right now. Short-term it will have a lot of ups and downs. The lack of iPhones for sale for 2 months will have a material impact on the financials for the upcoming quarter and this fiscal year. However, we should see significant growth in all areas of Apple business, with the expection of the iPod division. Their market share in PCs will continue to increase and the will continue to create different revenue streams, for example, the iPhone app store. I say buy, buy, buy and buy some more, but don't expect significant growth in stock during the short-term. Rather a long steady climb to $300+ by the end of 2009.
  • Reply 5 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Quote:
    Originally Posted by maiv View Post


    i know jim cramer is very bright, much more than i could ever hope to be, but some of his comments on apple doesn't make sense to me. i distinctly recall an article where the author stated that his portfolio did NOT perform as well as one would expect.



    someone did a review of his book and said what he wrote in the book is complete different from what he raves about on TV.



    Because Cramer's positions are well-known the market can adjust to his opinions. He is irrelevant.
  • Reply 6 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Admin, can we pleeeeeeeeese have a permanent Apple stock discussion thread? Seems like we need it.
  • Reply 7 of 29
    jasenj1jasenj1 Posts: 916member
    Quote:
    Originally Posted by SpamSandwich View Post


    Admin, can we pleeeeeeeeese have a permanent Apple stock discussion thread? Seems like we need it.



    Seconded.
  • Reply 8 of 29
    quinneyquinney Posts: 2,525member
    Quote:
    Originally Posted by chme6583 View Post


    Save your time and stop watching or listening to Cramer on anything. He is so up and down on Apple stock or for that matter on anything. He has lost his ability to pick stocks, not saying I'm an expert, but that's not my job.



    Here in this article on January 2, 2008, http://seekingalpha.com/article/5874...tions-for-2008, he predicted Apple will hit $300 and Google will hit $1000 by the end of 2008.



    Here on January 23, 2008, http://www.thestreet.com/video/index..._ite=#10400042 he said you've had your chance with Apple stock. Don't sell, but don't buy.



    Here on April 21, 2008, http://blogs.zdnet.com/Apple/?p=1601, he said buy it up.



    Now, he is saying sell. He makes no sense.



    Thanks for the post. It does make sense, however, if you realize that he is playing the

    volatility in AAPL rather than holding it long term. He has boasted in public in the past

    about being able to manipulate AAPL. I don't feel like looking for the link right now, but

    you seem to be good at searching.
  • Reply 9 of 29
    hypermarkhypermark Posts: 152member
    I would strongly encourage watching the keynote, if you haven't (it's online).



    After watching it, I have little doubt that carriers will sign up en masse, customers will see $199 as a relatively easy impulse buy, and once a couple 'have to have' iPhone apps start flooding into the market, Apple is going to do some crazy volume.



    Relative to killer apps, the demos that they showed in the keynote impressively showcased the capabilities of the platform (all that I can say is - WOW!). A couple of the gaming apps simply rocked.



    The different medical apps had me thinking Encyclopedia Brittanica for Web 3.0; and the Band demo spoke to the earnestness and fun spirit of the platform.



    And that's the point. It's a platform play that Apple is executing, and the greater the reach (both geographically and based on price point), the bigger the ripple effect will be on the acceleration of their growth, not to mention all of the halo effect goodness on the mac side of the business.



    Cheers,



    Mark
  • Reply 10 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Quote:
    Originally Posted by jasenj1 View Post


    Seconded.



    Thirded. (can I get a Fourthed?)
  • Reply 11 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Apple has managed to leverage their strengths into a model that every phone company and every game company has been unable to do. They now have a solid subscription model with the addition of impulse buy music, apps and freeware and the potential to radically affect how phones are viewed. I can't stomach at&t, so I'll continue to sit this out until the day their cursed agreement ends, but their advantages now are huge.
  • Reply 12 of 29
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by SpamSandwich View Post


    Thirded. (can I get a Fourthed?)



    Fourthed (Now who want to get Fifthted*?)







    * That sounds so wrong
  • Reply 13 of 29
    bageljoeybageljoey Posts: 1,755member
    Quote:
    Originally Posted by solipsism View Post


    Fourthed (Now who want to get Fifthted*?)






    Ok, I'll bite. FITHED (optional spelling variant according to the OED)
  • Reply 14 of 29
    sequitursequitur Posts: 1,901member
    I have come forth to sixfthed the motion.



    Hey, Spamsandwich, can you make the motion AND thirdthed the motion? Isn't that against Robert's Rules or something? Oh, h_ll, we can just make up the rules as we go along. Language, too.
  • Reply 15 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Quote:
    Originally Posted by sequitur View Post


    I have come forth to sixfthed the motion.



    Hey, Spamsandwich, can you make the motion AND thirdthed the motion?



    I was hoping that would go unnoticed...
  • Reply 16 of 29
    dreamrajdreamraj Posts: 83member
    Quote:
    Originally Posted by sequitur View Post


    I have come forth to sixfthed the motion.



    SEVENTHED!!!!!!! Can we get an Eighthed?
  • Reply 17 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Quote:
    Originally Posted by dreamraj View Post


    SEVENTHED!!!!!!! Can we get an Eighthed?



    Eighthed, ninethed and tenthed!
  • Reply 18 of 29
    nofeernofeer Posts: 2,422member
    Quote:
    Originally Posted by SpamSandwich View Post


    Apple has managed to leverage their strengths into a model that every phone company and every game company has been unable to do. They now have a solid subscription model with the addition of impulse buy music, apps and freeware and the potential to radically affect how phones are viewed. I can't stomach at&t, so I'll continue to sit this out until the day their cursed agreement ends, but their advantages now are huge.



    they also have what RIM and Nokia would die or buy for--operating software understanding and developement. what was shown was not hardware but software integration apple's mega strength. why need anything else. can you do what SJ did with any other moble phone??? no way. email is a powerful strenth of RIM but apple is offering you everything access JUST LIKE YOU LAPTOP, DESKTOP YOUR HOME AWAY FROM HOME. maybe google can get close. but it's the ipod/ itunes strength all over again, sure we geeks can figure out how to do a .mac service, but joe/ joan consumer wants easy, reliable, simple button. apple is it, has been it and is getting stronger.

    and look at all those touch screens.....htc, nokia, google, sony, etc....CRIPPLED WITH MS MOBLE 6.0



    the pendulum is swinging back to hardware/ software integration, because of user interface....look at the success of the wii.



    the competition is facing lack of software...i don't care how good the zune...creative whatever, diamond back, thunder LOOK, the software sucks and they know it. why do you think most make them look like an iphone.
  • Reply 19 of 29
    SpamSandwichSpamSandwich Posts: 31,087member
    Quote:
    Originally Posted by sequitur View Post


    Now you're cheating. At least have the courtesy to wait until someone votes after each of your votes.



    Please, seq. Have at it.
  • Reply 20 of 29
    sequitursequitur Posts: 1,901member
    Quote:
    Originally Posted by SpamSandwich View Post


    Eighthed, ninethed and tenthed!



    Now you're cheating. At least have the courtesy to wait until someone votes after each of your votes.
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