Apple 'not too big to blow it out' in upcoming quarterly results
With Apple's Oct. 18 quarterly earnings report approaching, one Wall Street analyst expects the iPhone maker to issue a "blowout" report, noting the company is "not too big" to surprise investors with sales of 12 million or more iPhones.
Yair Reiner with Oppenheimer said in a note to investors on Friday that although AAPL stock is up 37 percent in 2010, it has still lagged behind the company's fundamentals, in which consensus earnings per share estimates are up 75 percent since January.
"The prime factor behind the underperformance of the stock relative to the fundamentals seem to be investor concern about Apple's size," he wrote. But a blowout September quarter would spur an "overdue" catch-up with investors, he said.
As such, Oppenheimer has raised its 12-to-18-month price target for AAPL stock to $345. Reiner said he expects Apple to report $19.9 billion in revenue and $4.41 earnings per share, increases from his previous predictions of $18.5 billion in revenue and $4.01 earnings per share.
Reiner also increased estimates for iPhone sales to 12 million in the quarter, up from the previous projection of 10.5 million. He also sees Apple selling 4.5 million iPads, an increase from his earlier forecast of 3.9 million. He also said his estimates could still prove to be slightly conservative.
"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. "We're still taking our first baby steps into an iOS world in which seamless connectivity to cloud services through purpose-built apps lays waste to conventional modes of broadcasting, marketing, distributing, and consuming every manner of video, audio and printed material."
The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.
Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. But as the controversy has faded away, it's no longer considered a factor.
Yair Reiner with Oppenheimer said in a note to investors on Friday that although AAPL stock is up 37 percent in 2010, it has still lagged behind the company's fundamentals, in which consensus earnings per share estimates are up 75 percent since January.
"The prime factor behind the underperformance of the stock relative to the fundamentals seem to be investor concern about Apple's size," he wrote. But a blowout September quarter would spur an "overdue" catch-up with investors, he said.
As such, Oppenheimer has raised its 12-to-18-month price target for AAPL stock to $345. Reiner said he expects Apple to report $19.9 billion in revenue and $4.41 earnings per share, increases from his previous predictions of $18.5 billion in revenue and $4.01 earnings per share.
Reiner also increased estimates for iPhone sales to 12 million in the quarter, up from the previous projection of 10.5 million. He also sees Apple selling 4.5 million iPads, an increase from his earlier forecast of 3.9 million. He also said his estimates could still prove to be slightly conservative.
"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. "We're still taking our first baby steps into an iOS world in which seamless connectivity to cloud services through purpose-built apps lays waste to conventional modes of broadcasting, marketing, distributing, and consuming every manner of video, audio and printed material."
The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.
Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. But as the controversy has faded away, it's no longer considered a factor.
Comments
With Apple's Oct. 18 quarterly earnings report approaching, one Wall Street analyst expects the iPhone maker to issue a "blowout" report, noting the company is "not too big" to surprise investors with sales of 12 million or more iPhones.......
"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. .....
The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.
Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. .....]
Gee, its like the guy reads the paper and agrees with every article he reads.... So what is there to analyse.???????
Someone said antennagate would be big..... he agreed. Steve shows antennagate is no big deal.... he agrees.
Sorry, little data here, I think.
Just a thought,
en
I appreciate this always brings cries of derision from the math geniuses pointing out there is no numerical gain, but I'd like to see a stock split because it encourages more people to buy as they 'seem' as more affordable.
I'm also starting to wonder if they will split the stock one of these days. The high price puts me in to options... but some day I expect them to pay a dividend.
I am expecting a blowout, but while the law of large numbers doesn't prevent a surprise, I am kind of wondering what will drive the next 100% growth in earnings... and if the share price will keep pace.
I'm also starting to wonder if they will split the stock one of these days. The high price puts me in to options... but some day I expect them to pay a dividend.
Agreed on the law of large numbers, but the smart-phone segment of the entire market is increasing. In 5 years everything will be smart, or feature ( from < 10% now?). Theres the growth - although Apple should aim to garner more market share than they have now.
I appreciate this always brings cries of derision from the math geniuses pointing out there is no numerical gain, but I'd like to see a stock split because it encourages more people to buy as they 'seem' as more affordable.
I think this only brings derision when popple make it seem like:
* with a split a $3 increase in stock would be worth twice as much!!!
* people can't afford to buy AAPL without a split...
Or some such nonsense. The way you put it is entirely reasonable. There is no denying that people can be illogical with their response to the stock market. Remember when adding ".com" to your companies name bosted stock ridiculously?
Apple has a lot of potential if they improve their manufacturing and increase distribution. There is still short supply of iPhones, iPad in most of the world, starting with China. Once that is done, they should market the unlocked phones as well. I got mixed feeling about multiple radio techs like CDMA and TD-SCDMA... it would complicate their inventory management and the reduce the economies of scale.
iOS could be expanded into a host of new products like laptops, car navigation systems, etc. The capability of devices like the iPhone, iPod, iPad, etc could be improved with RFID sensors, improved cameras where applicable. The iTV has been crippled... how about enabling the Blue Tooth, keyboard, mouse use? Increasing the Flash to 64 or allowing after market upgrades with chip swaps? Let it run App Store applications, browser, etc. More video services besides Netflix? Charge $299 for a deluxe version. Keyboard, mouse extra. Why does Apple even need a crippled $99 product anyways? Anybody remember the IBM PC Jr?
I would like to see a stock split, I cant afford $300.00+ per share myself.
Yes you can. Just buy fewer shares. All of the online brokers allow odd lot purchases. At places like share builder you don't even have to buy whole numbers of shares, you just tell them how many $ per week you want in a certain stock. My dividend reinvestment allows me to buy fractional shares of stocks I own (although this is not applicable to AAPL).
Agreed on the law of large numbers, but the smart-phone segment of the entire market is increasing. In 5 years everything will be smart, or feature ( from < 10% now?). Theres the growth - although Apple should aim to garner more market share than they have now.
In this case, the law of large numbers isn't really a law, it's more like a theory. It might hold true if Apple wasn't pushing out successful new products and opening up new markets on a regular basis. You do have to wonder how the blockbusters can possibly keep coming, but for the time being at least, they have the products to continue the revenue growth at the current blistering pace. It will have to wind down at some point, but it doesn't look like soon.
I would like to see a stock split, I cant afford $300.00+ per share myself.
Here is a secret for you ... buy half as many as you'd buy at the split price.
The 'too big to grow much more' concept is really not well thought out.
That's the beauty of markets. The concept as you describe it is a self-imposed limitation of the human mind. The market is finite, but it remains a very big place with plenty of room for growth.
... I am kind of wondering what will drive the next 100% growth in earnings... and if the share price will keep pace.
... You do have to wonder how the blockbusters can possibly keep coming, but for the time being at least, they have the products to continue the revenue growth at the current blistering pace.
I've been wondering that for over a decade. I thought the iMac would change the world, and it did
The point is who knows what products Apple will introduce in the next few years, but the only certainties are:
1. We have no idea what they'll be
2. Analysts will deride them as failures
It will have to wind down at some point, but it doesn't look like soon.
Apple has positioned itself as a leader in connected mobile devices, with ten years of R&D and marketing research behind it. Products are already in the pipeline that we can't even guess about.
There will always be competing products aimed at keeping Apple off balance (like netbooks), but the best any competitor can hope for is to be almost as good.
I would like to see a stock split, I cant afford $300.00+ per share myself.
Position size is important. Figure out how much you want to spend on any one stock, relative to the size of your portfolio and then purchase accordingly.
For example, if your portfolio is 100K, it would be prudent to not be in for more than 10K for any one stock. You could buy 100 shares of a $100 stock, or 33 shares or a $300 stock.
Decide *before* you enter the trade what your maximum loss will be if it goes against you, and set a stop loss after you get in. Yes, you may be really bullish on prospects of the stock, but the market can be irrational longer than most of us can remain solvent. Protect your capital.
You might consider a hedge against your long position. For instance you could sell a call against your long stock, or even use part of the proceeds of the call to buy a put.
That may limit your upside potential within the option period, but will also limit your downside exposure.
You can also sell a put to perhaps buy AAPL at a discount.
There are lots of strategies that you can use to generate a little income off your investment even if it the stock does not pay dividends.
What more can a fanboi ask for? ;-)
For example, if your portfolio is 100K, it would be prudent to not be in for more than 10K for any one stock.
Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.
My portfolio is much more unbalanced today.
Why does Apple even need a crippled $99 product anyways?
I don't think the AppleTV is crippled at all. It does what it was meant to do, get digital content (iTunes) onto your TV for viewing. If you want a computer on your TV, get a computer. AppleTV is for watching content, nothing else. Why anyone wants to hook a computer up to a TV in the first place is just weird. Especially since most people have been going the opposite direction for years.
Your best route, buy a used Mac mini off of eBay and hook it up to your TV.
Almost $20 billion in one quarter! How far off is Apple from making $100 billion annually?
Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.
My portfolio is much more unbalanced today.
Investment genius that I am, I once sold my AAPL holdings which I bought for $25 or so for $11 as it hit a free fall.
I have since made up for that many times over, but at the time, I had no way of knowing that the stock would *not* go to 0. Looked in that context, I don't regret the action although I should have limited my losses better by keeping the stop tighter.
It's easy to say I should have done this or that with the benefit of hindsight.
I am glad you have done well with your AAPL holdings, and I congratulate you. Still, I stand by what I said. Investment is a numbers game, and one should never put too many of your eggs in one basket.
In my own case, currently my AAPL holdings sit at nearly 20% of my portfolio due to the stock's appreciation. However at the time of purchase, I committed less than 10% of my capital.
BTW, one poster wished that the volatility of the stock would be less. Don't knock it. Higher volatility keeps option prices higher and is great if you are a premium seller. Besides what makes AAPL a great stock is it's high beta.
The point is who knows what products Apple will introduce in the next few years, but the only certainties are:
1. We have no idea what they'll be
2. Analysts will deride them as failures
I don't care about what the analysts say, positive or negative. What matters to me (and to them, ultimately) is EPS growth -- current, and the promise for the future. Apple does have to keep pulling those rabbits out of their magic hat, and each rabbit has to be successively larger than the last one to keep earnings growing at the current rate. It's a very, very difficult trick, and becomes successively more difficult to replicate. I don't doubt that Apple has a great many things in the pipeline. What I'm saying is that each one has to be a bigger smash hit than the one before or you'll surely see lower multiples going forward. That's why the market is currently not totally convinced and may be selling AAPL a bit short. The market is collectively asking a legitimate question. The reaction to the next earnings report is going to be very interesting.
Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.
My portfolio is much more unbalanced today.
Nice one.
And, people forget that our true portfolio includes our house, the capitalized value of our human capital based on future earnings (and that of our spouse), our 401-Ks, the (hope) that our children will someday bail us out if/as needed, our future social security income (which, contrary to hyperventilations, is not 'broke' or 'bankrupt,' but will perhaps end up paying 20% less than previously promised), and indeed, even our health (assuming that it is good).