Analyst sees Apple Stock hitting $335 by 2012

Thu, Aug 6, 2009

Finance, News

Jon Markman of MSN Money lays out the case for Apple’s stock price hitting $335 by 2012.

To project a $335-a-share price in three years, I am just looking for 15% earnings growth and a return to the premium price-earnings multiple that is accorded to industry leaders. General Mills is growing at 8% and gets a 16 P/E. In this tough environment, Apple is being given a 22 P/E, but in a more buoyant climate it should have an opportunity to shift higher toward a P/E that’s double its growth rate, or 29. That may seem high now, but technology leaders are frequently given 30 to 50 P/Es as traders determine that they are willing to pay up for growth.

My estimate for Apple earnings next year, based on current and projected growth trends, is $7.90 a share. Grow that 15% for three years and multiply by a 28 P/E and you get roughly the $335 target. It won’t be easy, but it is within reach.

That might seem like a stretch but let’s take a quick look back.  3 years ago today, and before the arrival of the iPhone, Apple was trading at or around $68 a share.  Since then, Apple’s stock price has nearly tripled as it briefly flirted with the low $200 range in December ’07.  Currently, Apple is trading at $163.91, which represents more than a 100% increase in stock value since August 2006.

Looking forward to August 2012, a $335 price target certainly seems feasible – that is, of course, if Apple can out with a new product that can generate another significant revenue stream, a’la the iPhone in 2007.  Of course, if Apple releases a tablet and that becomes a big hit, there’s your new revenue stream right there.  But flying under the radar a little bit are the ramifications of Apple’s current and exclusive iPhone deal with AT&T.  Given all of the complaints surrounding AT&T’s subpar service, Apple will undoubtedly look to branch out to other carriers as soon as it becomes practical to do so.  And with all signs pointing towards the iPhone hitting Verizon sometime in 2010, on their upcoming 4G network of course, Apple may soon see its iPhone market share, and subsequently its iPhone revenue, increase dramatically.

Analysts may look at the iPhone and think, “Okay, what’s next?”, but the truth is that we haven’t even begun to see how profitable the iPhone will be for Apple.  Once its contract with AT&T expires, things will undoubtedly kick into high gear.


, , ,

3 Comments For This Post

  1. iphonerulez Says:

    Nice pipe dream. Apple’s share price will also be determined by the overall economy as you can see what the last couple of years has done to Apple’s share price. At the end of 2007 that $200 share price was supposedly on it’s way to the $300s until the housing lending collapse. Apple should never have dropped down below $100, but thanks to certain analysts trying to either beat the stock down or just ignorant saying that Apple would fare the worst in the computer industry due to it’s higher prices.

    The iPhone will continue to sell very well the rest of this year and China may provide some extra revenue stream, but the sort of share price growth you’re talking will put Apple above Microsoft in market cap and it really seems far-fetched. If we’re lucky we might see $200 by the end of this year but even that seems a stretch unless Apple can start selling their computers in quantity. The tablet is an unknown quantity and can’t be included in any projections. (Most of the industry believes the tablet will be closer to a failure than a hit) I reserve judgment until I at least see the device and/or hold it in my hands.

    I still have some minor concerns about Steve Jobs and how his health or company position will have some impact on Apple’s share price. I believe he will have at least another five years of decent health, but unfortanately analysts and investors probably aren’t as optimistic, so I also take that into consideration. Yeah, if everything is perfect investors might get lucky, but $325 in a few years still seems like a stretch. Apple might decide to split around $225 or so.

  2. lasix online Says:

    Now your blood pressure.
    signature: order celebrex

  3. order bentyl Says:

    There’s nothing to worry about.
    signature: buy danazol

eXTReMe Tracker