To date, everyone is in the "raise your target" camp.
Morgan Stanley analyst Katy Huberty this morning repeated her Overweight rating on the stock, lifting her target to $720 from $515 and adding the stock to her firm's Best Idea's List. She also moved up her estimates: for the September 2012 fiscal year, she goes to $46.52, from $44.04; for FY 2013, $57.57, from $49.50; and for FY 2014, $66.85, from $58.90.
"Investors still underestimate the potential earnings upside at Apple," she writes in a research note. "Apple trades at 9.5x our base case and 7.1x our bull case calendar year 2013 estimated EPS and Morgan Stanley’s 'What’s in the Price' analyzer suggests AAPL shares discount just 2% growth longer-term."
Huberty sees several potential EPS drivers which she is now including in her model:
- Enterprise tablet adoption combined with demand upside from lower priced iPad.
- Strong upgrade cycle to LTE (Long Term Evolution) capable iPhone starting later this year.
- Emerging market iPhone (plus iPad, Mac) growth driven by new carriers. China Mobile alone could add more incremental iPhone shipments than the Street models in total for calendar 13.
- Margin upside from lower ASP declines, increased mix of mobile devices and recent capital investments.
Huberty adds that her bull case scenario is for calendar 2013 profits of $80 a share - and a stock price of - are you sitting down? - $960. And she insists that the idea is not far-fetched:
- Apple’s CapEx forecast predicts a similar revenue trajectory.
- We don’t include new product categories like TV and low-price iPhone.
- CY 2013 bull case iPad forecast of 129 million units is in-line with what Morgan Stankey surveys imply for CY 2012.
- iPhone growth ex-China only assumes an average upgrade rate and a new subscriber number similar to calendar 2011.
- They assume no multiple expansion despite a possible dividend.
Meanwhile, Canaccord Genuity analyst Michael Walkley this morning upped his target on the stock to $710 form $665.
"Since we attended the iPad launch last week, our checks have indicated record pre-orders with wait times for shipping iPad models now reaching 2-3 weeks," he writes. "Given the new iPad’s leading hardware specs and iOS developer and application ecosystems versus all tablet competitors, we anticipate Apple will continue to dominate both market and value share of the growing tablet market in calendar 2012-13. . . Apple remains a top pick."
AAPL this morning is up $9.01, or 1.6%, to $577.11, yet another all-time high.
