Analyst: ‘More Than Enough Catalysts on the Horizon’ For Apple

Jonathan Hoopes, an analyst at ThinkEquity Partners, on Monday bumped his target price for Appleis stock from US$90 to $100, noting that there are "more than enough catalysts on the horizon" to justify the decision. Among them are healthy back-to-school sales, retail store traffic increases driven by "beyond-the-box" devices, "earnings upside surprises" in the first half of 2007, and "a move into the enterprise" in the second half of next year.

"Beyond-the-box" is Mr. Hoopesi term for the iPod and Appleis upcoming device code-named "iTV." He sees them pushing increased traffic through Appleis retail stores in time for the December holidays. In addition, he wrote: "We note that IMS Research has forecast that worldwide shipments of digital set-top boxes will grow at a six-year CAGR of 13% to 200 million units by 2011, and we expect Apple to participate in this growth category."

The analyst also expects iTV, along with the launch of new versions of Mac OS X and iLife early next year, to "extend capital appreciation in the medium term. Longer term, we expect Apple to find success in the enterprise, further boosting revenues, earnings power, and valuation multiples." He wrote: "Our analysis suggests that there is potential for up to $400 million (or over $0.40 per share) in contribution profits from Leopard in the 12 months after its release. However, we expect Apple to invest much of this financial bounty into marketing and R&D to drive additional PC share gains and accelerate the BtB [beyond-the-box] product roadmap."

Mr. Hoopes summed up: "Never in the history of the PC, has a company been better positioned than Apple is at this time, to both gain share and improve profitability, in our opinion. We encourage investors to focus their iLook At The Corei as we believe Appleis software holds the key to additional share gains and margin expansion."

He also reiterated his "Buy" rating on Appleis stock. At 1:55 PM EST on Monday, the companyis shares were selling for $75.28, up 3.12% for the day.