Apple added to short-term Alpha List at Piper Jaffray
Investment bank Piper Jaffray on Tuesday highlighted shares of Apple Inc. by adding them to its Alpha List, saying three key catalysts are likely to lead to significant share appreciation in the short term.
Companies assigned to the firm's Alpha List may have a 12-month rating of Buy, Neutral or Sell but, as a result of particular near-term catalysts or market conditions, an analyst chooses to emphasize the stock's potential for near-term growth.
In Apple's case, the catalysts will grace each of the company's core business segments, analyst Gene Munster told clients in a research report. Though still unannounced, the first is expected to be a media event early this month that will give way to a new family of iPod digital music players and possibly Mac notebook systems.
"We have analyzed stock action around the September events over the last 3 years," he advised cleints. "On average shares of Apple have risen +4 percent from the week before to the week after the September event and +47 percent from the week before to four months after (through the holidays)."
The Cupertino-based company should also see a boost several weeks later when it announces the results of fiscal fourth quarter ending September. The quarter has been host to a back-to-school promotion offering a free $299 iPod touch, which should drive increases in both iPod and Mac units, Munster said.
The analyst's model for the quarter stands at 2.55 million Mac units and 10.8 million iPods, though recent data from market research firm NPD has led him to believe actual results could come in closer to of 2.7 million to 2.9 million Macs and 10.7 million to 11.2 million iPods.
A final near-term growth driver identified in Munster's research report pertains to the ongoing international iPhone 3G rollout and, more specifically, plans for the device to hit Russia in the coming months.
He noted that Apple increased the iPhone's addressable subscriber base from 370 million to 660 million (+78 percent) last month by adding 34 new carriers in 21 new countries. More recently, however, Russian wireless provider Vimpelcom confirmed that it will be the first regional carrier to offer the iPhone 3G later this year.
Munster said Vimpelcom, which has 42 million subscribers, is likely to be joined in offering the iPhone by Russia's largest carrier, MTS, which maintains a subscriber base of 61 million. Combined, the two would increase iPhone's addressable market by more than 15 percent to 760 million potential subscribers.
"We expect this rollout to drive upside to our September estimates of 4.1 million units," the analyst said. "We believe the additional carriers added in the September quarter, as well as the likely addition of Russian carriers by the end of 2008, are under-appreciated by the Street."
Munster maintains a Buy rating on Apple shares with a $250 price target.
Companies assigned to the firm's Alpha List may have a 12-month rating of Buy, Neutral or Sell but, as a result of particular near-term catalysts or market conditions, an analyst chooses to emphasize the stock's potential for near-term growth.
In Apple's case, the catalysts will grace each of the company's core business segments, analyst Gene Munster told clients in a research report. Though still unannounced, the first is expected to be a media event early this month that will give way to a new family of iPod digital music players and possibly Mac notebook systems.
"We have analyzed stock action around the September events over the last 3 years," he advised cleints. "On average shares of Apple have risen +4 percent from the week before to the week after the September event and +47 percent from the week before to four months after (through the holidays)."
The Cupertino-based company should also see a boost several weeks later when it announces the results of fiscal fourth quarter ending September. The quarter has been host to a back-to-school promotion offering a free $299 iPod touch, which should drive increases in both iPod and Mac units, Munster said.
The analyst's model for the quarter stands at 2.55 million Mac units and 10.8 million iPods, though recent data from market research firm NPD has led him to believe actual results could come in closer to of 2.7 million to 2.9 million Macs and 10.7 million to 11.2 million iPods.
A final near-term growth driver identified in Munster's research report pertains to the ongoing international iPhone 3G rollout and, more specifically, plans for the device to hit Russia in the coming months.
He noted that Apple increased the iPhone's addressable subscriber base from 370 million to 660 million (+78 percent) last month by adding 34 new carriers in 21 new countries. More recently, however, Russian wireless provider Vimpelcom confirmed that it will be the first regional carrier to offer the iPhone 3G later this year.
Munster said Vimpelcom, which has 42 million subscribers, is likely to be joined in offering the iPhone by Russia's largest carrier, MTS, which maintains a subscriber base of 61 million. Combined, the two would increase iPhone's addressable market by more than 15 percent to 760 million potential subscribers.
"We expect this rollout to drive upside to our September estimates of 4.1 million units," the analyst said. "We believe the additional carriers added in the September quarter, as well as the likely addition of Russian carriers by the end of 2008, are under-appreciated by the Street."
Munster maintains a Buy rating on Apple shares with a $250 price target.
Comments
"On average shares of Apple have risen ..... +47 percent from the week before to four months after (through the holidays)."
Overstatement. So many ways to skin this cat. Here's the price change* data for the past five years for the time period he mentions:
2002: -2.7%
2003: 0.0%
2004: 66.5%
2005: 40.7%
2006: 11.0%
2007: 28.2%
It's basically all over the map. The 'average' means little.
* I could be off by a tiny bit here and there because of specific dates, but the expected value of my error should be zero.
The hard numbers AND the forecasts for Apple growth in this and the next quarter are nothing short of PHENOMENAL on all fronts.
There are no hard numbers for next quarter.
First thing I thought when I saw the headline was, 'AAPL will be at $70 by Christmas.' I suspect that investors in AAPL are a little over-enthusiastic at the moment. It really wouldn't take much for the air to come out -- one disappointing product announcement would easily get people thinking that Apple's magic has worn off a bit.
one disappointing product announcement would easily get people thinking that Apple's magic has worn off a bit.
Once you take out the $20 billion cash position, Apple has a forward P/E of 24, for what is a very high growth, low risk (due to no debt) stock it is very cheap.
Chance of bankruptcy is nil, they could continue to run for several years even if revenue dropped to zero, combine that with small market share in computers, and a near monopoly in recorded music, and you have an explosive combination.
The hard numbers AND the forecasts for Apple growth in this and the next quarter are nothing short of PHENOMENAL on all fronts. So . . . you know what THAT means! AAPL is about to tank. It seems to happen every time: Good news (record profits and sales) = Bad; Bad News (Dell going tits up) = Bad for our beloved equity. I, for one, am getting a little tired of the market manipulation in this holding. Wish there was something I could do about it (other than sinking even MORE savings into it).
Man, isn't that the truth. I am constantly amazed at how a few analysts can literally screw up a major companies business model.
alpha
Definition
A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).
I think I'll wait until this list reaches at least a beta.
www.investorwords.com/
alpha
Definition
A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).
A simpler (and intuitive) definition of Alpha is: "excess return" -- i.e., return in excess of that which would be considered 'normal' given the risk characteristics of the stock. A stock that outperforms expectations is said to have positive alpha, and one that underperforms, negative alpha.
Of course, everyone hopes this will be expected excess return, but often, it is based on simple extrapolations of what the stock has done in the past!
Dave
www.investorwords.com/
alpha
Definition
A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).
Uh, thanks?
Many of us here know the definition of Alpha, or Beta, R-squared, Standard Deviation, Mean or Sharpe Ratio for that matter (no, I not talking about the difference between Sterling or Shannon). I am always amazed that the people writing the articles don't seem to know or they don't even ask the obvious questions. How about something as simple as "What does the 'Alpha' in Alpha List mean?"
beta
Definition
A quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500. Specifically, the performance the stock, fund or portfolio has experienced in the last 5 years as the S&P moved 1% up or down. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile.
I think this means if Apple is on the alpha list someone's on the beta list. More than likely it's Microsoft, the added energy for Apple has to come from a loss of energy from some large mass.
Just like four years ago (or so), Apple has hit a critical mass where growth will be exponential for a while. Apple was down with the broader market today... should be a great chance for 30%+ gains over the next six months.
With the ARM resets almost at the peak now, real recovery should start soon unless something really screws it up.