updated 11:45 am EDT, Fri September 18, 2009
Credits margins, changing economic conditions
Macquarie analyst Phil Cusick today upgraded his rating for Apple stock from "Neutral" to "Outperform," and raised his price target from $175 to $220. The worth of Apple stock has already surged past $175 in recent days, and is currently valued at over $185. The spike is generally linked to an upcoming accounting change, which will allow Apple to more accurately state its iPhone and Apple TV revenues.
Cusick is pushing his target based on two other factors, namely the global economy, which is said to have passed through the worst of the recent recession. Mac and iPod sales should now be "healthy," according to Cusick, and it is expected that the iPhone will "dominate the smartphone market" in 2010, with as many as 33 million units sold. Sales may hit 41 million in 2011; the iPhone's marketshare is forecast to slip to 11 percent however, only holding out in terms of revenue thanks to high average selling prices (ASPs).
In this regard Apple may be aided by the iPhone's gross margins, which Cusick had previously predicted would slide over time from 50-plus percent to between 30 and 40. Because of consistent pricing though, it is thought that margins will hold at 40.2 percent in FY10, and above the 40 percent mark for subsequent years. Non-GAAP EPS estimates for the September 2009 quarter are being raised from $7.80 to $8.66.