“The current street consensus earnings estimates for Apple (AAPL) do not appear to reflect the potential upside from iPhone sales through 2008,” Portfolio Unlimited reports via SeekingAlpha.
“Assuming 20.0% operating margin on iPhone, 35% tax rate, and 900 million shares outstanding, Apple could earn about $1.82 in incremental EPS from iPhone sales and about $5.87 in total EPS in the fiscal 2008. Applying a 35x P/E multiple to the fiscal 2008 EPS gives a potential AAPL share price of $205.6 or about 65% upside from the current AAPL price of $124.5, in the next 12 to 18 months,” Portfolio Unlimited writes. “Although these assumptions may seem too optimistic to some, AAPL shares offer an attractive risk/reward profile to those who believe in the success of Apple’s latest gadget.”
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