iPhone will outperform market expectations, pushing shares of Apple to $185, FBR says

Posted:
in AAPL Investors edited July 2015
Recent struggles for Apple stock are based on unfounded fears out of China, FBR Capital Markets said on Tuesday, telling investors it believes the "speed bump" will be over soon as strong iPhone sales continue.




Analyst Daniel H. Ives raised his estimates for Apple's just-concluded June quarter, in which he believes the company shipped 49 million iPhones, though he said the 50 million barrier is "within reach." A copy of Ives's latest estimates were provided to AppleInsider.

He believes Apple's revenue for the quarter was $49.2 billion, with earnings per share at $1.79. Those are increases from his previous estimates of $47.8 billion in revenue and $1.72 EPS.

FBR's new, higher estimates come as the firm has also reiterated its "outperform" rating for AAPL stock. With continued iPhone growth, Ives believes shares of the company will reach $185 within the next year.




With a week to go before Apple reveals the results of the June quarter, shares of the company are down about 5 percent since it reported its March earnings. But to Ives, those recent losses are a mere "speed bump" on the way to future continued growth.

"Ultimately we see more legs to the iPhone 6 product cycle than the Street is anticipating for the next few quarters, with China (despite recent macro headwinds) as a major driver of top-line growth, coupled by new products (Watch, Apple Pay, streaming) starting to pave the way for future avenues of consumer penetration," Ives wrote.

With new products on the horizon, most notably an anticipated iPhone refresh in September, he believes Apple is positioned strongly heading into its 2016 fiscal year.
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Comments

  • Reply 1 of 22
    MacProMacPro Posts: 18,471member
    Apple to $185: That would be a 1 Trillion $ Apple wouldn't it? I don't see that coming quite so soon but hey ... here's hoping! :smokey:
  • Reply 2 of 22
    maestro64maestro64 Posts: 4,683member
    The real problem Apple has it the fact no institutional buyers is going to over buy Apple, they are too afraid it will fall and they do not want to be caught holding the bag. There are far too many example of a company like Apple falling to the waste side that Wall street is invest on habit not logic or reasoning. As fas as they are concern is Apple is at the top and there is no other top for them. Until some other company starts catching up they do not care.

    With that said, I wish I could be rational and realize that it most likely will not go up from here and sell and walk away, but they lock me in with the dividends which are paying out for me greater than any other investment.
  • Reply 3 of 22
    red oakred oak Posts: 680member
    I hope Tim and team are aggressively buying back shares at these prices
  • Reply 4 of 22

    These high target prices are very annoying to Apple shareholders.  Even a high target price makes Apple's share price go into the red.  If it were Netflix, Google or Amazon, their share prices would have gone up 5% on that type of news.  With Apple, it's like nothing good was announced.  The institutional investors are staying away from Apple because they can't forget what happened back in 2012 when Apple went into a death spiral.  How the heck does a company like Hewlett-Packard have nearly 80% institutional ownership and Apple only has 61% institutional ownership.  H-P is practically struggling for survival.  The big boy investors don't like or trust Tim Cook.  If Jeff Bezos tells investors something, he's totally believed.  If Tim Cook tells investors something, he's called a liar.  It appears as though Apple shareholders are going to remain snake-bit for quite some time to come.  For Apple shareholders, no news is good news and merely a precursor of doom.

  • Reply 5 of 22
    fallenjtfallenjt Posts: 3,982member
    Look at that graph, it'll go to $140 pretty soon.
  • Reply 6 of 22
    gtbuzzgtbuzz Posts: 129member
    If I were an institution and did not hold Apple stock, I would be embarrassed. If I held some of the other positions they hold, I would be further embarrassed when comparing them to Apple. Apple is indeed buying back it's stock because they know this is a great company at a good price.
  • Reply 7 of 22
    sog35 wrote: »
    Please give examples of companies LIKE APPLE that feel to the waste side.....

    Give me an example of a company like Apple that had:

    1. The #1 brand appeal
    2. Combination of hardware, software, services, and ecosystem
    3. Ridiculous awesome balance sheet with $200 billion in cash
    4. 50% EPS growth
    5. 90% customer retention
    6. Domination of the most successful consumer product ever

    Microsoft? Not that they've "fallen to the wayside," but they're definitely off their peak valuation by a good bit.

    Not that i expect AAPL to go down at all, but $185 is pretty aggressive. It's not going to just keep going up into perpetuity. 150 - 160 is much more realistic.
  • Reply 8 of 22
    brucemcbrucemc Posts: 1,540member
    Quote:

    Originally Posted by Freshmaker View Post





    Microsoft? Not that they've "fallen to the wayside," but they're definitely off their peak valuation by a good bit.



    Not that i expect AAPL to go down at all, but $185 is pretty aggressive. It's not going to just keep going up into perpetuity. 150 - 160 is much more realistic.



    Perhaps he should have added "and a P/E ratio which is lower than the market average..." (Apple PE is around 15).  As many have noted before, Microsoft's P/E at the time was north of 50, and peaked at 81.  So taking that into account, Apple is not like Microsoft in regard to peak valuation at all.

     

    Agree that $185 is aggressive in near term (12 months), but not IMO out of consideration in a couple of years.  

  • Reply 9 of 22
    aaarrrggghaaarrrgggh Posts: 1,583member
    freshmaker wrote: »
    Not that i expect AAPL to go down at all, but $185 is pretty aggressive. It's not going to just keep going up into perpetuity. 150 - 160 is much more realistic.

    Well, if it goes to $185 I might be forced to retire; I would start selling around $150-160 though. That said, I think Apple will be a $1T company. I don't think that it is going to happen as quickly as it should, but it will happen. They might get to a point where they want or need to spin off entities, or even make a very large purchase like a bank.
  • Reply 10 of 22
    e1618978e1618978 Posts: 6,075member
    Quote:
    Originally Posted by Maestro64 View Post



    The real problem Apple has it the fact no institutional buyers is going to over buy Apple, they are too afraid it will fall and they do not want to be caught holding the bag. There are far too many example of a company like Apple falling to the waste side that Wall street is invest on habit not logic or reasoning. 



    Apple revenue could go to zero, and they could still keep their R&D going unchanged *forever*.   Apple has so much money that it is impossible for them to fail.  Also, institutional buyers currently own 59.53% of the company.

  • Reply 11 of 22
    maestro64 wrote: »
    The real problem Apple has it the fact no institutional buyers is going to over buy Apple, they are too afraid it will fall and they do not want to be caught holding the bag. There are far too many example of a company like Apple falling to the waste side that Wall street is invest on habit not logic or reasoning. As fas as they are concern is Apple is at the top and there is no other top for them. Until some other company starts catching up they do not care.

    With that said, I wish I could be rational and realize that it most likely will not go up from here and sell and walk away, but they lock me in with the dividends which are paying out for me greater than any other investment.

    Total gobbledygook if you ask me !
  • Reply 12 of 22
    dasanman69dasanman69 Posts: 12,985member
    e1618978 wrote: »
    maestro64 wrote: »
    The real problem Apple has it the fact no institutional buyers is going to over buy Apple, they are too afraid it will fall and they do not want to be caught holding the bag. There are far too many example of a company like Apple falling to the waste side that Wall street is invest on habit not logic or reasoning. 


    Apple revenue could go to zero, and they could still keep their R&D going unchanged *forever*.   Apple has so much money that it is impossible for them to fail.  Also, institutional buyers currently own 59.53% of the company.

    Nothing and no one is too big to fail.
  • Reply 13 of 22
    e1618978e1618978 Posts: 6,075member
    Quote:
    Originally Posted by dasanman69 View Post



    Nothing and no one is too big to fail.



    It is very unlikely that they will ever fail.  It is possible, but it would require the company to throw away over 100 billion dollars on useless crap, and I just don't see that happening.



    "Nothing and no one is too big to fail"  - not a particularly useful soundbite unless backed up with deeper thought.   Too big to fail is normally something people talk about with highly leveraged banks, not conservative companies with a couple hundred billion in cash.



    Give a reasonable scenario where Apple fails - I think that you will find that every possible failure scenario would require Nortel-level incompetence.   Every failure scenario would require Apple to completely go against its corporate culture.

  • Reply 14 of 22
    dasanman69dasanman69 Posts: 12,985member
    sog35 wrote: »
    dasanman69 wrote: »
    Nothing and no one is too big to fail.

    in the super long term.  

    But the next 20 years?  No way Apple fails.

    Famous last words. The corporate graveyard is full of companies that couldn't fail yet did. Tastes and fortunes can change overnight.
  • Reply 15 of 22
    gatorguygatorguy Posts: 21,306member
    sog35 wrote: »
    oh stop with the BULLSHIT.

    Name me a single company that was as powerful as Apple and went bankrupt in 20 years time.

    The guys that made Pet Rocks. ;)

    Seriously tho I can't imagine Apple ever going bankrupt. How could they possibly spend the money they already have? But I can imagine a scenario, however remote it might be, where like Standard Oil or Bell Telephone there's a break-up of Apple into smaller competing companies someday.
  • Reply 16 of 22
    dasanman69dasanman69 Posts: 12,985member
    sog35 wrote: »
    dasanman69 wrote: »
    Famous last words. The corporate graveyard is full of companies that couldn't fail yet did. Tastes and fortunes can change overnight.

    oh stop with the BULLSHIT.

    Name me a single company that was as powerful as Apple and went bankrupt in 20 years time.

    General Motors would not be around if it were not bailed out by the US government.
  • Reply 17 of 22
    e1618978e1618978 Posts: 6,075member
    Quote:
    Originally Posted by dasanman69 View Post



    General Motors would not be around if it were not bailed out by the US government.



    They never had the cash that Apple has, Apple never had the crappy union sucking the life out the company that GM had.



    GM made shit products for 40 years before they went bankrupt, it took a long time.

  • Reply 18 of 22
    sflocalsflocal Posts: 4,755member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Even at its absolute peak GM was not even close to the market cap and profits of Apple.  Not even close.

     

    Even at its peak there were many other car brands that were equal rivals in the USA, Germany, Italy, ect.  Ford, Crystler, BMW, Merc, ect were all strong at the same time as GM.  No way did GM have 90% of industry profits like Apple has.  

     

    And it took DECADES for GM to fall.  From their peak in the 60's it took almost FIFTY YEARS.

     

    Try again.

     

    The only examples I can think of are Bell Telephone and Standard Oil.  And both were because of government intervention not because of corporate failure.




    It's funny reading the posts of others trying to compare failed companies to Apple.  They were in totally different situations, yet people here seem to think that Apple is in the same boat.



    Sure, the "mighty have fallen".  Apple though is in a very unique position that others were not.  Apple has so much cash in the bank that if for some reason future revenue suddenly goes to zero, it can survive just on that cash hoard for basically the rest of our adult lives.  GM could not do it.  



    The only way (right now) that I can see Apple disappearing - way WAY down the road - is if management suddenly becomes the most laziest, fat-cats ever, lighting up their cigarettes with rolled $100 bills, making such crappy products that no one ever wants to buy anything Apple again thus making the Apple brand synonymous with junk retailers like K-Mart (or Samsung) and in a few decades burns through all the money.  



    Really people.  It would take an epic event found only in fictional movies to essentially erase Apple from existence.  So I suppose, if some alien were to zap the earth with some giant EMP pulse, wiping out all modern technology, then yeah... Apple will fail.  Then again, if that were to happen, I think we'd all have more pressing problems to deal with than worrying about the iPhone 75+.

  • Reply 19 of 22
    isteelersisteelers Posts: 738member
    sog35 wrote: »
    For those who think a $1 trillion market cap is crazy it isn't.

    Earlier this year Apple's market cap was at $750 billion and no one really though it was over-valued.  So how does Apple add another $250 billion in market cap?

    Easy.

    Samsung is worth over $200 billion right now.  Their mobile division is worth about $100 billion.  If Apple continues to dominate the sector, than Samsung's mobile division could decrease in value by 50%.  That adds $50 billion to Apple.

    Google is worth about $350 billion right now.  With more domination of iOS and even an AppleSearch that would easily chop off 10% value from Google.  That is $35 billion added to Apple.

    Microsoft is worth about $350 billion right now.  With more growth of Mac, iPad growth in the business sector and cloud.  Apple could easily chop off 10% of Microsoft's worth.  Add $35 billion to Apple.

    Netflix, Comcast, TimeWarner Cable, Pandora, XM radio, Dish, DirectTV combined are worth about $400 billion.  If AppleTV takes off they could easily take 10% of their value.  Add another $40 billion to Apple.

    Now add another $40 billion just for growth from Apple's legacy products and dividend increases.

    That gives you $200 billion.

    The rest of the $50 billion can come from Car, Health, fitness, and buybacks.

    Going to ONE TRILLION in a couple years is not a pipe dream at all.  In its peak IBM were valued over $1 trillion adjusted to inflation. Microsoft was valued at $850 billion adjusted to inflation.

    Could you just imagine debt-ridden governments around the world salivating over Apple even more if they were to reach a trillion market cap and half a trillion in cash overseas? Talk about a feeding frenzy.
  • Reply 20 of 22
    dasanman69 wrote: »
    Famous last words. The corporate graveyard is full of companies that couldn't fail yet did. Tastes and fortunes can change overnight.

    sog35 wrote: »
    oh stop with the BULLSHIT.

    Name me a single company that was as powerful as Apple and went bankrupt in 20 years time.

    dasanman69 - Nearly 11,000 posts in less than 6 years. That's 8 posts every single day for six years. :rolleyes: You don't put up numbers like that by thinking before posting.
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