Some investment analysts raising AAPL targets
Wednesday, January 16, 2013 @ 7:45pm
| Reinforcing the notion that some of Apple's recent stock-price tumble may be down to call options timing and manipulations of the media meant to keep the price low, two prominent investment houses have painted a bright picture for the company based on the expectation that Apple will be able to beat consensus estimates on its flagship iPhone sales. One firm has raised year-end targets on the stock to a staggering $1,111 -- more than double the current price.
Topeka Capital Markets and their analyst Brian White have good reason to be upbeat: White says the present product mix "has never been stronger" and expect the company to launch an entirely new product line sometime this year, most likely the long-rumored Apple-branded HDTV -- which, despite the emphasis on televisions at CES earlier this month, is still "ripe for disruption," reports AppleInsider. The likelihood of a deal coming soon with China Mobile, the world's largest carrier by far by subscriber base, to carry the iPhone and iPad will keep sales of the company's most popular devices growing at record pace, the firm believes, and then there are the expected polishes and improvements to existing products.
Gene Munster of Piper Jaffray has also advised his clients of positive upsides for Apple in the coming months, starting with the claim that Apple will beat consensus estimates on the iPhone (which is currently at 47.6 million units sold during the holiday quarter) by just over 10 percent, or five million units for a total of 52 million. Munster bases his optimism on reports from US carriers such as AT&T and Verizon that iPhone sales were strong enough to push their results into record territory, and uses that as an assumption on foreign sales. Munster's numbers echo those of investment bank Bernstein, which tweeted a chart showing historical trends and a strong probability of Apple beating consensus numbers.
He thinks Apple sold 15 million iPhones in the US and at least twice as many in all other countries combined. Given the unusually quick and widespread rollout of the iPhone -- even including China, albeit only in the last month of the quarter -- it could be a very safe assumption. Numerous reports have said that iPhone demand is still "robust" but more spread out than with previous models, perhaps confusing analysts who don't see the line-ups and store sell-outs that accompanied the initial nine-country release.
On the iPad front, Piper Jaffray expects around 25 million iPads sold during the December quarter, slightly above consensus estimates of 24 million. Munster guesses the mix to be 20 million full-size iPads and five million iPad minis, but if US holiday gift surveys were any indication Apple may have a surprise for analysts on the strength of the iPad mini, which saw widespread shortages in the most popular models all around the world as Christmas buying season reached its peak.
The firm expects a drop in Mac sales, reflective of the overall trend in the desktop and notebook industry as more consumers shift to primarily using mobile devices for most tasks. Munster believes Apple will have sold only 4.8 million Macs in the last calendar quarter, a drop of seven percent from last year but still better than the industry as a whole, which has seen a significant contraction in PC sales over the last year.
Topeka's White has rated AAPL a "buy" at its present price, which rose four percent on Wednesday after numerous media outlets (including this one) debunked several earlier articles -- including a prominent one by the Wall Street Journal which has since been edited to remove inaccurate figures -- that appeared to be trying to manipulate the stock price of the company, possibly in an effort to avoid payouts on call options written during the summer, when the stock price was on a strong upward swing and selling for around $600 a share. It closed today at $506.09, up more than $20 from yesterday's nine-month low.
White told clients that Apple will likely continue to dominate the tablet market in spite of increased competition, that it will remain the most profitable by far of the smartphone makers, and that new "smart" TVs from Samsung, LG, Huawei and other companies are not that impressive (particularly at the five-digit price points many of them will sell for). As Apple continues to express interest in the TV market, White remains confident that it has something disruptive in mind -- though whether any actual product will debut in 2013 remains to be seen, as rumors of Apple entering the HDTV arena have persisted for years. White also mentioned the possibility of a lower-cost iPhone, though little hard evidence exists to suggest that Apple is actually making one at present.