Apple Victory Over Samsung Pushes $AAPL to Record High

| Apple Stock Watch

Apple's Big Pile of CashShares in AAPL rose to a new record high Monday, as investors reacted positively to Apple’s courtroom victory over convicted copycat Samsung. Analysts treated the news favorably, with Wells Fargo’s Maynard Um bumping his price target for the stock and Barclays analyst Ben Reitzes telling his clients that his current target could prove conservative.

Late on Friday, the jury in Apple’s U.S. patent battle with Samsung announced its verdict, giving Apple a sweeping victory. The jury found that Samsung had infringed on six key Apple patents, while the principle of patent exhaustion protected Apple from infringement claims on Samsung’s standards-essential patents (SEPs).

In a research note obtained by The Mac Observer, Mr. Reitzes noted that Apple’s competitors may be forced to think twice about how they compete in the smartphone industry. He also said that the result could protect Apple’s “pricing umbrella,” a term encompassing Apple’s high margins and industry-leading carrier subsidies.

“If Apple forces competitors to innovate more,” he wrote, “it could take longer for competitive products to come to market, and make it more expensive to develop them.”

That’s because circumventing Apple’s utility patents, such as the pinch-to-zoom patent, is going to be hard.

“Considering consumer habits are hardening around these technologies as the mobile device market matures,” he wrote, “we believe designing a competitive alternative could prove more difficult. As a result, we could also see a scenario developing that leads to further fragmentation of Android where smart phone makers attempt to differentiate further – destandardizing Apple alternatives even further.”

Accordingly, it’s hard to quantify just how much the verdict is worth, but Mr. Reitzes said it is worth more than the US$1.05 billion damage award the jury gave Apple. He said that his $750 price target for AAPL “could now be quite conservative,” but he left it in place. He also reiterated his “Overweight” rating, the rough equivalent of a “Buy.”

Looking at the Android side of the equation, Mr. Reitzes’s colleague at Barclays, Anthony DiClemente, told his clients that he doesn’t, “expect this verdict alone will significantly impact Android’s momentum, we believe that risk to Android exists if Samsung receives injunctions against the sale of its infringing products.”

Wells Fargo analyst Maynard Um went as far as to bump his price target for AAPL from $640-$660 to $740-$760, though part of the increase was due to the fact that Apple was heading into its strongest product cycle with the release of the iPhone 5 this fall.

Mr. Um noted that the appeals process will be long, and that Apple still has to win a permanent injunction on Samsung’s infringing projects.

“If Apple is successful to conclusion,” he wrote, “we believe it could result in a significant royalty stream [for Apple], all else equal in Samsung’s share.”

Mr. Um maintained his “Outperform” rating on AAPL, which is also the rough equivalent to a “Buy.”

Shares in AAPL ended the day higher, at $675.68, up $12.458 (+1.88 percent), on moderate volume of 15.2 million shares trading hands. That’s a record high that gives Apple a market cap of $633.4 billion. An intra-day high was set at $680.87 earlier in the day.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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