Analyst raises target on Apple stock to $260, anticipates 55 million iPhones in 2011

Thu, Mar 11, 2010

Finance, News

In a recent note to investors Merrill Lynch analyst Scott Craig wrote that Apple is on target to sell approximately 33 million iPhones in 2010, a figure he believes is attainable regardless of whether or not Apple strikes a deal to sell the iPhone on Verizon.

Looking forward to 2011, Craig writes that Apple will be able to reach the Wall Street consensus of 44 million iPhones sold only if a) Verizon begins carrying the iPhone or b) Apple experiences another “demand driver” such as a strong sales in a growing market (i.e China), or perhaps, an impressive new iPhone model that rekindles strong demand for the device. As an aside, Steve Jobs has reportedly called the upcoming iPhone an “A+ upgrade.”

Assuming that Apple solidifies a deal with Verizon to carry the iPhone, Craig writes that Apple could ship as many as 55 million iPhones in 2011, a figure, which if true, would undoubtedly propel Apple’s stock price into the stratosphere.

With regards to earnings, Craig upped his 2011 earnings estimates for Apple to $13.65 from a previous estimate of $13.44. Craig also raised his price target on Apple stock up to $260 – though if things keep on going the way they’ve have over the past few days, Apple stock price may reach that target sooner than later.

Ever since Apple announced a firm ship date for the iPad last week, Apple’s share price has been on a tear. On Tuesday afternoon, Apple shares closed out the trading day at $224.84 a share, marking yet another company record.

But moving back to the iPhone coming to Verizon, is that a likely scenario for 2010, or even 2011 for that matter?

Given AT&T’s much publicized inability to adequately handle or anticipate the surge of bandwidth that iPhone users devour, the iPhone moving to another carrier in the US has been a popular talking point for some time now. Every time Apple makes a big announcement, rumors begin circulating that a Verizon/iPhone deal will be announced as well. Most recently, rumors suggested that Apple would use its recent iPad unveiling to announce that the iPhone would be be available on every major US carrier by the end of 2010.

These rumors have obviously not come to fruition, and in Apple’s most recent conference call, Apple COO Tim Cook reiterated Apple’s allegiance with AT&T and expressed confidence that AT&T’s new initiatives to improve and enhance their 3G network would prove beneficial.

No one knows for sure, but AT&T’s exclusive contract to carry the iPhone is rumored to end in late June of 2010. If Apple wants to make the iPhone available on other carriers, then this Summer is as good a time as any.


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