I’ve just posted my new AAPL 12-month price target at Eventide.

My calculations work out to $384 per share. In light of Friday’s closing price it’s not as big of a jump in price as it might have been viewed just a few months ago.

12 months   between 300-400
24-36 months   between 400-500

al dependent on all legs of the chair getting longer!

DawnTreader - 07 March 2010 12:10 AM

I’ve just posted my new AAPL 12-month price target at Eventide.

My calculations work out to $384 per share. In light of Friday’s closing price it’s not as big of a jump in price as it might have been viewed just a few months ago.

Your calculation is based on a p/e ratio of 22 which is very low for the growth you expect. 30-35 would be more appropriate. Even with the present Google p/e of 28, the price target should be $490 per share

But H, perhaps we should distinguish between what we think it should be and what we expect it to be. We all think it should trade at a much higher p/e because that is what the fundamentals tell us. But the reality will probably be different.
I don’t think the market will ever really get AAPL and that will hold it back. Apple is a company that puts the customer first and I’m sure for some shareholders that would be disconcerting. Unless you really understand the culture of Apple investing in Apple might seem like a risky venture.

Hamourabi - 07 March 2010 08:15 AM

DawnTreader - 07 March 2010 12:10 AM

I’ve just posted my new AAPL 12-month price target at Eventide.

My calculations work out to $384 per share. In light of Friday’s closing price it’s not as big of a jump in price as it might have been viewed just a few months ago.

Your calculation is based on a p/e ratio of 22 which is very low for the growth you expect. 30-35 would be more appropriate. Even with the present Google p/e of 28, the price target should be $490 per share

The estimate is based on the p/e remaining relatively constant. The factors that change are revenue and earnings. Obviously Apple’s share price would be higher if it were more rationally valued relative to growth. Unfortunately, there’s no way to forecast an expanding p/e for a company trading currently at a p/e of about 22 with recent quarterly eps gains of about 47%.

DawnTreader - 07 March 2010 12:10 AM

I’ve just posted my new AAPL 12-month price target at Eventide.

My calculations work out to $384 per share. In light of Friday’s closing price it’s not as big of a jump in price as it might have been viewed just a few months ago.

Based on April 2011 my price target is $376 based on a TTM eps of 15.02 and TTM p/e of 25.  As far as revenue for FY10 I’m looking for 60.234B and13.57 eps and 2011 79.346B and 18.36 eps but we really need to see some sales numbers for the iPad to get a better handle on the 2011 numbers since this will be a key growth driver for 2011.

pats - 07 March 2010 09:58 AM

DawnTreader - 07 March 2010 12:10 AM

I’ve just posted my new AAPL 12-month price target at Eventide.

My calculations work out to $384 per share. In light of Friday’s closing price it’s not as big of a jump in price as it might have been viewed just a few months ago.

Based on April 2011 my price target is $376 based on a TTM eps of 15.02 and TTM p/e of 25.  As far as revenue for FY10 I’m looking for 60.234B and13.57 eps and 2011 79.346B and 18.36 eps but we really need to see some sales numbers for the iPad to get a better handle on the 2011 numbers since this will be a key growth driver for 2011.

I don’t feel so alone now on two fronts: My April 2011 price target and forecast of around $60 billion in revenue for this fiscal year.

As you point out the iPad is a wild card. So is the overall market’s performance which might raise the p/e multiple. The iPad will be easier to metric in terms of contributions to Apple’s revenue and earnings. A broad market move higher (which should raise Apple’s p/e multiple) can not be reasonably forecast at this time.

These targets seem pretty frothy.  The financials support these but we are talking crazy growth in price in a year.  As wheeles as pointed out so many times aapl unfortunately is tied to closely to index funds which weigh it down from it’s true potential.  I’d love to see these levels but not sure they are achievable.  I really hope to be proven wrong and have to buy everyone an iPad or something over shots in Vegas….

runedge - 07 March 2010 02:39 PM

These targets seem pretty frothy.  The financials support these but we are talking crazy growth in price in a year.  As wheeles as pointed out so many times aapl unfortunately is tied to closely to index funds which weigh it down from it’s true potential.  I’d love to see these levels but not sure they are achievable.  I really hope to be proven wrong and have to buy everyone an iPad or something over shots in Vegas….

Based on the pace of growth do you think a company growing earnings at a 40%+ pace would see its p/e multiple drop to well under half of that rate? In my view AAPL is already trading at the low end of a rational range.

I agree with runedge that these price targets are unrealistic in the next year.

I have great confidence that Apple (the company) will continue to perform extremely well.

I have less confidence in AAPL (the stock), primarily because I am concerned about the macro environment (e.g., deleveraging, potential inflation, sovereign debt crises)

runedge - 07 March 2010 02:39 PM

These targets seem pretty frothy.  The financials support these but we are talking crazy growth in price in a year.  As wheeles as pointed out so many times aapl unfortunately is tied to closely to index funds which weigh it down from it’s true potential.  I’d love to see these levels but not sure they are achievable.  I really hope to be proven wrong and have to buy everyone an iPad or something over shots in Vegas….

Did you ever get a chance to flip through the   Mobile Internet Report   from Morgan Stanley?  The report is so large it probably scared most folks away from reading, but If your a tech investor it is a must read IMO.  Maybe after reading through Morgan’s Report our estimates might look not so Frothy.

One of the key themes from the report was that Mobile is ramping faster then Desktop Internet Did and Will Be Bigger Than Most Think - 5 Trends Converging (3G+Social Networking + Video + VOIP + Impressive Mobile Devices).

Another is Apple Leading in Mobile Innovation + Impact To me means it is their race to lose and the bottom line takeaway is

Wealth Creation/Destruction is Material in New Computing Cycles - Now in Early Innings of Mobile Internet Cycle, the 5th Cycle of the Last Half Century

These estimates could all be very accurate.  That is why I said I would love to eat crow over shots in Vegas a year from now.  I’ll buy the shots!  I trade for a living so my vision has become far more short term focused than that of an investor.  My fingers are crossed that I am wrong and you are right.  My 401k is huge long aapl so all the more reason I hope you all are right.  Here’s to way too many shots a year from now in Vegas!

Trading and Vegas seem to go well together.  As to the multiple as we all know Apple will command a higher multiple when the economy recovers if their growth remains intact so I would expect the multiple to pickup with the earnings into 2011, but living in the Detroit area I have to look close to see the signs of a recovery.  Too much unemployment which leads to not only a depressed economy but a bunch of depressed people.  Maybe with spring and a bit of sunshine both the economy and the grass can grow

runedge - 07 March 2010 04:04 PM

These estimates could all be very accurate.  That is why I said I would love to eat crow over shots in Vegas a year from now.  I’ll buy the shots!  I trade for a living so my vision has become far more short term focused than that of an investor.  My fingers are crossed that I am wrong and you are right.  My 401k is huge long aapl so all the more reason I hope you all are right.  Here’s to way too many shots a year from now in Vegas!

Are you saying it’s too early to book a flight? 

It’s much easier to project AAPL PPS in a vacuum than it is in a market to which AAPL is tethered.  I’ll be happy with $300+.  It has a real chance, if the overall market cooperates.

I sold some of my long position on Friday, expecting to repurchase half of what I sold with a pull-back next week.  I don’t have any margin at this point, a first in over a year.  It feels good.

yojimbo1 - 07 March 2010 03:35 PM

I agree with runedge that these price targets are unrealistic in the next year.

I have great confidence that Apple (the company) will continue to perform extremely well.

I have less confidence in AAPL (the stock), primarily because I am concerned about the macro environment (e.g., deleveraging, potential inflation, sovereign debt crises)

I’ll go back to my question for Tony. AAPL is trading (according to Yahoo!) at a trailing p/e multiple of 21.33. How much more do you expect the market to discount Apple’s 40%+ eps growth? In my view the shares are currently undervalued compared to growth. Even if the p/e remains relatively constant, the shares will move higher.

yojimbo1 - 07 March 2010 03:35 PM

I agree with runedge that these price targets are unrealistic in the next year.

I’m going to rejoin the ranks of the heretics here. The big issue I have with these projections comes back to the enormous market cap that Apple would have. As the market cap increases I believe that the p/e that Wall Street will allow it to have will decrease. As runedge said, I keep going on about how AAPL is so closely tied to the S&P futures. If they start to move down, then AAPL will follow even with growing earnings.

As an aside, I honestly believe that the 4-1 split rumor and then Cramer’s performance on Thursday that browbeat people into buying AAPL were intended to achieve two things. Firstly a short squeeze in AAPL, and secondly a short squeeze in the S&P futures to try and create a breakout as the SPX was at a key resistance level. But I digress.

This will not be music to people’s ears, but I think the high over the next few years is likely to be around 275. At those levels the p/e will look really cheap given all the revenue increases, but the S&P will be such a huge drag on AAPL as to weigh it down. I am not going to argue this point as it is one of those gut feel things. I’d rather just wait and see if we clear that level.