updated 10:55 am EDT, Mon August 11, 2008
Credit Suisse rates Apple
Switzerland's Credit Suisse has issued its first-ever tracking report on Apple, an announcement reads. The bank has set a $200 12-month price target for Apple stock, citing what it claims is a defiance of the poor surrounding economy. Apple is said to have several factors working to its advantage; among these are a reduction in the real and perceived costs of switching from Windows to a Mac, and a closer parity in the performance of Macs and PCs, thanks to Apple's switch to Intel processors.
Apple's rapid retail expansion is said to be helping as well, not only in terms of increasing access to hardware and software, but by giving the company control over how its products are marketed. While a normal electronics shop sells Apple gear without preference, Apple Stores have staff trained to push technology advantages.
Credit Suisse also applauds Apple's switch to subsidized sales for the iPhone. The problem with the unsubsidized pricing, the bank says, is that it was "simply too expensive" for the mass market, and not competitive with other cellphones. Moreover, Apple should now have an easier time negotiating with carriers, who were previously wary of Apple's demand for revenue sharing. Ironically, this means carriers will absorb the full burden of unlocked iPhones, while Apple gets to claim the same wholesale price of each unit. This should stabilize Apple's earnings, says Credit Suisse.
The bank notes that its price target is equal to 30x its CY09 EPS estimate of $6.66.