updated 09:52 am EDT, Wed August 22, 2012
Cites continued strong sales of iPhone, iPad, Mac
Analyst Charlie Wolf at Needham & Company has substantially raised his company's target price for AAPL stock, going from $620 to $750 in the wake of Apple's continuing price rise. The company symbolically broke Microsoft's record for all-time highest valuation earlier this week with a close at $665, though it is currently trading slightly lower.
Accordingly, Wolf has created a new target price of $750 per share, anticipating strong performance of expected new and refreshed products in Apple's holiday lineup to close out the year. In a note to investors, he notes that both iPhone and iPad sales had "far exceeded" expectations, the former's performance being particularly strong in light of widespread reports that a new model is coming soon. He had previously set the $620 target price back in February.
The iPad's success in corporate and educational environments also contributed to the price, says Wolf. He credits the tablet with 17 percent of the adjusted target pricing. He gives the "halo effect" of the iOS devices on Mac and other Apple product sales credit, adding 11 percent to the projection, and says that Apple's continuing ability to generate excess cash (despite the initiation of a dividend program under CEO Tim Cook) added another 17 percent.
Wolf did not change his 2012 overall earnings estimate of $43.75 per share, nor his 2013 prediction of a $50 EPS average. He also maintained his "Buy" rating on the stock.
"The lingering risk that we see in the Apple story is that the company may no longer innovate at the same rapid pace and with the same disruption that characterized the era when Steve Jobs was at the helm," Wolf told his investors. Any deterioration of the iPhone's market share or gross margin, he cautioned, would have a serious impact on his price target.
Apple is expected to launch a new iPhone model as early as mid-September, though the company has dropped no firm hints on this. Speculation also points to a "mini iPad" type device coming soon, along with possible refreshes or updates to some Mac and iPod models.