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AAPL Target Price: $500 Per Share
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DawnTreader
- [ Ignore ]
I’ve just updated my 12-month AAPL share price forecasts and target prices via my latest post at Eventide.
Snippet: By this time next year I expect AAPL to be trading above $500 per share. The share price appreciation will be fueled by Apple’s consistent revenue and earnings growth throughout FY2011 and the shares will reach my $508 target price without an appreciable expansion of the current price-earnings multiple of just over 20 times trailing 12-month earnings.
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I’ve just updated my 12-month AAPL share price forecasts and target prices via my latest post at Eventide.
Snippet: By this time next year I expect AAPL to be trading above $500 per share. The share price appreciation will be fueled by Apple’s consistent revenue and earnings growth throughout FY2011 and the shares will reach my $508 target price without an appreciable expansion of the current price-earnings multiple of just over 20 times trailing 12-month earnings.
If the FEDBOYZ print enough pseudo-bucks, $500 is inevitable in short order. Sell a share and fill your gas tank ONCE with gasoline!
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I’ve just updated my 12-month AAPL share price forecasts and target prices via my latest post at Eventide.
Snippet: By this time next year I expect AAPL to be trading above $500 per share. The share price appreciation will be fueled by Apple’s consistent revenue and earnings growth throughout FY2011 and the shares will reach my $508 target price without an appreciable expansion of the current price-earnings multiple of just over 20 times trailing 12-month earnings.
If the FEDBOYZ print enough pseudo-bucks, $500 is inevitable in short order. Sell a share and fill your gas tank ONCE with gasoline!
The US dollar still buys a lot of non commodities.
The dollar buys a lot of real estate and Apple products.
The world is still comfortable loaning to the US long term at very low rates.
Apple has faith in the US dollar to the tune of long $50 billion.
Quite odd… Does this make sense?
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A great approach DT.
This really is the quick summary and very realistic view of what is ahead of us. There is nothing crazy here, in fact, when you see targets like this that don’t mention the ‘less cash’ PE, don’t complain about growth vs PE, that just simply accepts today’s PE and just drives ahead with very realistic growth in revenue and earnings, then you really have the Apple story in properly targeted and reasonably guiding your trading.
Of course, we can’t honestly say what is ahead for the overall market, and that is key to determining AAPL’s price once you get beyond analysis of Apple’s earnings. However, for digging into the upside without even further expanding earnings, let’s take an optimistic view and then take “legenedary hedge fund manager” Julian Robertson’s call for a 25-30 PE, which is very reasonable given Apple’s growth if coupled with general improvement in the overall market. Let’s even just take the low end of his range and use the 25 PE…hmmm, how does a 6 handle sound?
[ Edited: 14 November 2010 08:49 PM by cranium ] -
... Apple has faith in the US dollar to the tune of long $50 billion ... Quite odd… Does this make sense?
I’ve not delved into Apple’s SEC filings. It is possible that not all $50 billion are held in US dollar. For hedging and taxation reason, and ease of transacting with component suppliers, some might be held in suppliers’ currency. Having said that, Apple holding so much US dollar is a concern given Fed’s continual policy of devaluating US dollar.
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DawnTreader
- [ Ignore ]
A great approach DT.
This really is the quick summary and very realistic view of what is ahead of us. There is nothing crazy here, in fact, when you see targets like this that don’t mention the ‘less cash’ PE, don’t complain about growth vs PE, that just simply accepts today’s PE and just drives ahead with very realistic growth in revenue and earnings, then you really have the Apple story in properly targeted and reasonably guiding your trading.
Of course, we can’t honestly say what is ahead for the overall market, and that is key to determining AAPL’s price once you get beyond analysis of Apple’s earnings. However, for digging into the upside without even further expanding earnings, let’s take an optimistic view and then take “legenedary hedge fund manager” Julian Robertson’s call for a 25-30 PE, which is very reasonable given Apple’s growth if coupled with general improvement in the overall market. Let’s even just take the low end of his range and use the 25 PE…hmmm, how does a 6 handle sound?
cranium, I didn’t venture into the arguments that suggest a much higher price-earnings multiple is warranted due to the company’s hefty cash position. I wanted to keep the points simple. Without an expansion of the current p-e multiple Apple will reach $500 by next November based on the strength of earnings growth alone.
Should the market wake up and give Apple a more appropriate valuation based on earnings growth and cash on hand, we’ll reach $500 per share much sooner.
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Robert, thanks for the post. I sure love your May $400 target. That would pay for my graduation nicely.
The road there worries me a bit. Since the 2008 crash AAPL has had a relatively steady pattern actually (flash crashes and daily technical moves notwithstanding):
Oct 2008 - Mar 2009: range-bound
Mar 2009 - Sep 2009: steady advance
Oct 2009 - Feb 2010: range-bound
Feb 2010 - Apr 2010: rapid advance
Apr 2010 - Aug 2010: range-bound
Sep 2010 - Oct 2010: rapid advance
Oct 2010 - ?: range-bound (since earnings on 10/18)I’d be happy if this pattern continues. We haven’t had a long or large decline in a while. Mace expects a large drop before we go back up. I’m hoping it won’t be like Jan 2008.
Your valuation multiples are reasonable for the current environment. I know we want a higher one, but I don’t think the market will give that to AAPL.
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DawnTreader
- [ Ignore ]
Your valuation multiples are reasonable for the current environment. I know we want a higher one, but I don’t think the market will give that to AAPL.
Roman:
As much as a jump to $500 over the next 12 months might appear aggressive to some, it’s downright conservative from the perspective of working inside these numbers. The only factor that might slow the share price assault are concerns over the pace of growth as FY2012 appears on the horizon. Still, I could see the next fiscal year producing at least a 40% revenue gain even as Mac unit sales growth decelerates to somewhere near 20% and iPhone unit sales growth moderates a bit.
If one removes the Apple iPad from the FY2011 revenue mix, there remains strong unit sales growth across the other product lines. I suspect revenue from iAds, app and content sales to continue to grow adding to growth in FY2012.
We have in front of two strong years of revenue and earnings growth and this stock warrants a much higher valuation. My $500 price target is based on the current p-e multiple remaining as earnings rise 60% or so this fiscal year. Any expansion of the p-e multiple moves us much closer to that $500 price target.
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... Apple has faith in the US dollar to the tune of long $50 billion ... Quite odd… Does this make sense?
I’ve not delved into Apple’s SEC filings. It is possible that not all $50 billion are held in US dollar. For hedging and taxation reason, and ease of transacting with component suppliers, some might be held in suppliers’ currency. Having said that, Apple holding so much US dollar is a concern given Fed’s continual policy of devaluating US dollar.
From the 10K
As of September 25, 2010, the Company had $51 billion in cash, cash equivalents and increase of $17 billion from September 26, 2009. The principal component of this net increase was the cash generated by operating activities of $18.6 billion, which was partially offset by payments for acquisition of property, plant and equipment of $2 billion and payments made in connection with business acquisitions, net of cash acquired, of $638 million.
The Company?s marketable securities investment portfolio is invested primarily in highly rated securities, generally with a minimum rating of single-A or equivalent. As of September 25, 2010 and September 26, 2009, $30.8 billion and $17.4 billion, respectively, of the Company?s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings.
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I’ve just updated my 12-month AAPL share price forecasts and target prices via my latest post at Eventide.
Snippet: By this time next year I expect AAPL to be trading above $500 per share. The share price appreciation will be fueled by Apple’s consistent revenue and earnings growth throughout FY2011 and the shares will reach my $508 target price without an appreciable expansion of the current price-earnings multiple of just over 20 times trailing 12-month earnings.
I’ve had this as a five year target since 2005. Looks like I’ll miss my target by at least a year.
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DawnTreader
- [ Ignore ]
I’ve just updated my 12-month AAPL share price forecasts and target prices via my latest post at Eventide.
Snippet: By this time next year I expect AAPL to be trading above $500 per share. The share price appreciation will be fueled by Apple’s consistent revenue and earnings growth throughout FY2011 and the shares will reach my $508 target price without an appreciable expansion of the current price-earnings multiple of just over 20 times trailing 12-month earnings.
I’ve had this as a five year target since 2005. Looks like I’ll miss my target by at least a year.
Timing is an issue on long-term projections considering the vagaries of broader market psychology and performance. We could see $500 per share before next November and more and more I see November as the outside date to reach that price target.
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Gregg Thurman
- [ Ignore ]
If the FEDBOYZ print enough pseudo-bucks, $500 is inevitable in short order. Sell a share and fill your gas tank ONCE with gasoline!
The US dollar still buys a lot of non commodities.
The dollar buys a lot of real estate and Apple products.
The world is still comfortable loaning to the US long term at very low rates.
Apple has faith in the US dollar to the tune of long $50 billion.
Quite odd… Does this make sense?
Sure if you think the dollar isn’t going to weaken anymore, and most likely will strengthen.
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You can’t do more, make more, be more, than the next guy, if you think like the next guy. Think different.
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Gregg Thurman
- [ Ignore ]
This really is the quick summary and very realistic view of what is ahead of us. There is nothing crazy here, in fact, when you see targets like this that don’t mention the ‘less cash’ PE, don’t complain about growth vs PE, that just simply accepts today’s PE and just drives ahead with very realistic growth in revenue and earnings, then you really have the Apple story in properly targeted and reasonably guiding your trading.
Of course, we can’t honestly say what is ahead for the overall market, and that is key to determining AAPL’s price once you get beyond analysis of Apple’s earnings. However, for digging into the upside without even further expanding earnings, let’s take an optimistic view and then take “legenedary hedge fund manager” Julian Robertson’s call for a 25-30 PE, which is very reasonable given Apple’s growth if coupled with general improvement in the overall market. Let’s even just take the low end of his range and use the 25 PE…hmmm, how does a 6 handle sound?
Using a “PE” no higher than 23.16 I get a one year target of $506. Value appreciation is strictly earnings growth. However, I don’t see “PE” remaining flat through that period, because the rapid growth in AAPL’s valuation will attract more buyers, driving the “PE” higher.
Signature
You can’t do more, make more, be more, than the next guy, if you think like the next guy. Think different.
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DawnTreader
- [ Ignore ]
Using a “PE” no higher than 23.16 I get a one year target of $506. Value appreciation is strictly earnings growth. However, I don’t see “PE” remaining flat through that period, because the rapid growth in AAPL’s valuation will attract more buyers, driving the “PE” higher.
If we reach $500 per share prior to November of next year all the better. Earnings alone will drive the shares to that threshold even if the valuation ratios remain constant.
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DawnTreader
- [ Ignore ]
The more I look through the numbers, the more my price forecasts and target look reasonable and perhaps even a bit conservative based on earnings growth alone. Apple could perform better than forecasts (the reason for periodic revisions). But for now I’m using roughly 60% eps growth on average in the numbers.
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DawnTreader
- [ Ignore ]
No matter the recent pullback in the share price, I’m confident we’ll see $400 per share by early May and $500 by early November.
[ Edited: 18 November 2010 01:58 AM by DawnTreader ]
