updated 09:45 am EDT, Tue September 15, 2009
Jump linked exclusively to iPhone
Needham & Co. is raising its price target for Apple stock from $200 to $235, says one of the research firm's analysts, Charlie Wolf. The bump is based entirely on the performance of the iPhone, Wolf notes, and in particular the effects of the App Store. The store is said to have had "explosive" growth since January, and it is thought that a "virtuous circle" involving app developers and smartphone buyers could soon push iPhone sales higher.
A number of phone buyers are expected to migrate from basic cellphones to smartphones, and gravitate towards the iPhone, due to the amount of apps available. This in turn may further spur app developers, particularly in light of the introduction of Genius recommendations for apps. The option is a "first step" in helping app shoppers find titles they might genuinely enjoy, says Wolf.
At the same time, Needham is lowering the value of Apple's other product businesses. The firm now anticipates fewer people switching from Windows PCs to Macs, for instance; the slide is based on a reexamination of the halo effect of iPhones and iPods. Apple is likewise expected to make less profit on Macs as a result of MacBook price cuts in June, and it may even choose to subsidize future Mac prices using money from the iPhone.
A "Strong Buy" rating is being maintained, and forecast GAAP earnings per share for 2009 and 2010 are being kept at $5.80 and $6.70.