Goldman Sachs Bumps AAPL Target to $520 on Strong Sales

| Apple Stock Watch

AAPL Tuesday morningApple seems to be doing a pretty good job at gaining customers even in a weak world economy. Apple is doing so well, in fact, that Goldman Sachs analyst Bill Shope has raised is twelve month target price for the company’s stock from US$480 up to $520.

“Apple’s momentum appears even more resistant to macroeconomic pressures than we previously realized,” Mr. Shope said, according to Barrons. “Wwe believe the stock has significant upside from current levels — even after recent outperformance.”

Apple has managed to continually grow its iPhone and iPad user base, and Mac sales continue to rise even as the over all PC market slows down.

Mr. Shope raised his December quarter (first quarter) iPhone sales estimate from 26.3 million units up to 26.8 million. He is also expecting Apple to sell some 16.92 million iPhones in the quarter, along with 13.05 million iPads.

Along with his revised sales estimates, Mr. Shope bumped up his fourth quarter revenue estimate from $27.37 billion up to $28.71 billion with an EPS of $7.30, up from $6.49.

Mr. Shope’s $520 target price for Apple’s stock comes with a “Buy” rating. Apple is currently trading at $417.36, up 3.91 (0.95%).

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Ross Edwards

I was talking to a friend who works for Edward Jones the other day and he knows I am an Apple fan, so he asked whether I thought Apple could sustain their sales growth even in this economy. 

We talked it over, and what we realized is that, despite Apple’s higher price tag (which is not necessarily a factor for the products in Tim Cook’s locked supply chains, i.e. iPad and Macbook Air), the poor economy actually works in FAVOR of Apple’s integrated it-just-works model, in favor of Apple’s true product being “the iOSX user experience.” 

The reason for this is that in a poor economy, people are looking at troublesome, bloated, glitchy, virus-vulnerable Windows/PC boxes, and realizing that in terms of making a computer purchase that’s going to have to last them a while, if they can barely afford to do it once, they sure as hell can’t afford to do it OVER.  The Apple price tag CAN be higher at first (with the aforementioned caveats), but it’s a known price and once paid it tends to stay paid.  Apple’s exhaustive customer service goes a long way to ensure that.

A tool manufacturing CEO once said that people don’t want a quarter-inch drill; they want a quarter-inch HOLE.  Dell/HP/etc say, “Pay us a little bit for the drill kit, and you should be able to put it together and use it to make all the holes you want.  That’ll be extra for the drill bit, and then more for some drill bit rust protection, and you might need a power conditioner because the motor in the drill is pretty delicate, and every year you’ll need to have your drill bits updated to the latest fastening interface.”  Apple says, “Pay us $N once, and you’ll have as many holes as you need, and we’ll worry about making sure the hardware side of things works as expected.”

My friend agreed with the rationale, and said he plans to continue to push Apple as a sound stock to hold long-term, even against the conventional wisdom that all hot streaks are eventually supposed to turn cold.

Lee Dronick

A tool manufacturing CEO once said that people don?t want a quarter-inch drill; they want a quarter-inch HOLE.?

There is also the “whole” drilling experience. The quality of the chuck, motor power, the trigger pull feel, LED work lights, spirit levels, and such. I will buy a good drill, not the best because I am not a contractor, but I have had it with power tools.

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