Barclays raises Apple target to $143 a share

Mon, Apr 6, 2009

Finance, News

Barclays issued a report on Apple Stock today, and gave it an “Overweight” rating along with a target price of $143 a share, up from a previous target of $113.  Citing what they believe will be a more diverse lineup of iPhones in addition to the release of an ultra-portable device, Barclays wrote that Apple was one of its top stock picks for the year.

Of course, not everyone is as bullish on Apple these days.  Last week, RBC analyst Mike Abramsky maintained his “underperform” rating on the stock, and stuck with his $70 price target.  In a note to clients, Abramsky wrote that Apple isn’t likely to come out with a low-end iPhone, and that a price umbrella (to borrow a phrase from Tim Cook) might well eat into Apple’s market share.

The myth of the low-end $99 iPhone

Ever since the iPhone hit the shelves, financial analysts have have been saying that Apple needs to come out with a more varied lineup of iPhone models if it wants to sustain growth.  For many of these analysts, what a diverse iPhone lineup really means is a cheap $99 iPhone.  What these analysts fail to take into account, however, is the simple fact that marketshare doesn’t equal profitability.  Sure, Apple could come out with a $79 iPhone and grow its marketshare by leaps and bounds, but that won’t help its bottom line.  On the contrary, recent evidence suggests that if Apple is going to introduce more iPhone models, it will instead unveil a more high-end iPhone to differentiate its lineup.  In fact, iPhone carriers are already aggressively trying to sell off their remaining iPhone 3G inventory in preparation for a new iPhone launch this June.

A $73 difference in price target is huge, and it seems that Barclays price target has a bit more meat to it than RBC’s.

In any event, Apple stock has been on a tear lately.  Over the past 2 weeks, the stock has climbed nearly 18 points, and at the close of trading on Monday, it was trading at $118.45 a share.


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