“Apple Computer shares soared more than 11 percent Monday as Piper Jaffray analyst Gene Munster set a $100 price target on the company’s stock because of growing evidence that iPod sales are leading to more purchases of Apple’s Macintosh computers. Apple climbed $6.18 to close at $61.35 as investors reacted positively to the brokers’ views. With almost 46 million shares exchanged, the Cupertino, Calif.-based company’s stock was the fourth most active issue on the Nasdaq . Apple has averaged 9.9 million shares traded daily over the past three months,” Rex Crum reports for CBS MarketWatch. “Munster said he raised his price target because the iPod music player is showing a definite ‘halo effect,’ bringing in first-time Mac buyers. He added that a survey of 200 iPod users in the United States showed that 6 percent of former PC users bought a Mac after buying an iPod. Another 7 percent said they intended to buy a Mac within the next 12 months.”
“The analyst cut his total halo-effect estimate from 13 percent to 6.5 percent to account for error or bias among respondents who haven’t yet gone through with their Mac purchases. ‘At the end of the day, we think the numbers justify the iPod’s reality in driving Apple’s business,’ said Munster, who maintained his ‘outperform’ rating on Apple’s stock,” Crum reports. “The study included 154 people who were PC owners at the time they bought an iPod, with the remaining 46 being Mac owners. Munster’s survey also showed staggeringly high satisfaction with the iPod. Out of 200 respondents, 199 said they were ‘generally satisfied’ with the product. Munster’s $100 price target on Apple’s stock is nearly double his prior $52 goal. The last time Apple shares reached $100 was in intraday trading June 20, 2000, a day before Apple executed a 2-for-1 stock split.”
“Additionally, Fulcrum Global Partners analyst Robert Cihra raised his price target on Apple to $65 a share because of the strong demand for iPods and the new flat-panel iMac G5 desktop,” Crum reports. “Cihra of Fulcrum Global Partners echoed some of Munster’s comments in raising his price target on Apple to $65 from $53. The analyst said signs from Apple’s supply chain show the company is meeting market demands. Cihra increased estimates on iPod sales in Apple’s current quarter to 4 million from 2.9 million and added that the digital media player would account for 33 percent of the quarter’s revenue, up from 13 percent a year ago.”
“Cihra also raised his estimates on the quarter’s iMac shipments to 286,000 units, up 26 percent from a year ago, and said that improvements in notebook sales should help Apple’s total Mac sales reach 968,000 units in the quarter. Cihra’s numbers forecast that Apple’s Mac line will grow 17 percent from a year ago, while the broader PC market is expected to grow 11 percent,” Crum reports. “Should Cihra’s estimates hold, it will be the first time in 11 quarters that Mac shipments will have grown faster than those of the overall PC market.”
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MacDailyNews Take: November 22, 2004 will not be remembered as a average day for Apple Computer, Inc. Today may represent the first substantial “real world” recognition that Apple Macintosh is again being embraced by consumers. It is a recognition that many Apple watchers have been discussing since anecdotal evidence first began trickling in; indeed, Apple themselves have been talking about the anecdotal evidence in various quarterly conference calls over the past year or so. That little “deck of cards” that holds thousands of songs in your pocket may be in the process of dealing out a Royal Flush to Apple’s bread and butter, the Macintosh. We wouldn’t advise getting too overheated with excitement; after all, Apple is highly dependent on consumers, creative markets, and education, so a bad economic turn for any one or combination of those markets could significantly impact Apple’s bottom line. However, this quarter is shaping up as a very, very strong one for Apple and they are getting very close to firing on all cylinders at this time. If the company can deliver iMac G5s, work towards a timely release of a PowerBook G5, and fulfill the promise of Mac OS X Tiger on or around Macworld in January, the sky’s the limit for Apple and the Mac platform – especially as the Wintel world’s dissatisfaction continues to grow with Window XP and its attendant spyware, adware, virus, and worm woes combined with the lack of enthusiasm for an oft-delayed, stripped-down Windows Longhorn that’s nowhere in sight.