Barclays Capital analyst Ben Reitzes bumped his 12-month price target 13 percent from US$630 per share $710 per share. In a research note obtained by The Mac Observer, the analyst argued that Apple can continue to, “extract more profits out of the traditional PC and mobile phone industries.” Mr. Reitzes also argued that Apple could grow to be a $300 billion per year company with earnings per share of $75.
While he cited growth of Mac sales (the PC industry), Mr. Reitzes’s research note said that it was iPhone growth that was the prime reason behind his price target bump.
He wrote, “Our research points toward solid momentum for the iPhone 4S through the calendar first quarter. Sales seem to be benefiting from international rollouts, pent-up demand and overall excitement around the unmatched Apple ecosystem (apps, iCloud, Siri, iOS, etc.).”
He said that the iPhone 5 will help Apple grow its smartphone share even more later this year, as will the release of iOS 6. Apple hasn’t announced either product yet, but the company’s track record suggests it will do so in 2012.
He also singled out China as a growth market for Apple. China Telecom was added as an iPhone carrier earlier this year, and iPhones have been hot sellers throughout the last year. Even China Mobile claims it has 15 million iPhones on its network, even though Apple doesn’t have a deal with the firm and China Mobile’s 3G network is incompatible with the iPhone.
One of the more interesting aspects of this research note concerned Apple’s future growth. With a lot of questions circulating about whether or not Apple can row still more in light of how big it had already gotten, Mr. Reitzes said that he thinks Apple could be a $300 billion per year company.
“Given a perception that the ‘law of large numbers’ eventually applies to Apple,” he wrote, “we wanted to actually try to pinpoint how big we think it can get in 3-5 years. We believe that Apple’s current P:E of 11.5x FY13 actually understates future growth since its market share is immature in its top 3 growth segments.”
He added, “In short, by CY-end 2015, we believe Apple can demonstrate EPS power of about $75 per share, with revenue of about $300 billion. This assumption doesn’t even factor in a potential integrated line of Apple television sets, which would add tens of billions and well over $5 in EPS to this forecast.”
Shares in Apple ended the day lower at $530.26, down $2.90 (-0.54%), on strong volume of 28.9 million shares trading hands. The company’s market cap dipped below $500 billion on Monday, and currently sits at $494.4 billion.
*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.