Morgan Stanley ups Apple target price to $180 from $150

Morgan Stanley today raised their target price on Apple Inc. (AAPL) to $180 from $150.

In a note to clients, the brokerage said that Apple’s iPhone will drive more ancillary revenue than Morgan had previously modeled.

The brokeragemaintained its “overweight” rating and said that Wall Street estimates are understating the true operating margin potential of Apple’s business.

Morgan Stanley also said that, looking longer-term, Apple’s Mac OS X 10.5 Leopard operating system launch, increased store revenue, AT&T payments, accessories sales on a much larger iPhone installed base are all likely to increase margins in the future.

29 Comments

  1. This was a no-brainer upgrade. Here is the algorithm they use:

    * When price stays over old target for a while, increase target above above where stock price is currently tracking.

    * Send upgrade notice to customers.

    * Make money for nothing (thanks to Dires Straits)

  2. doc if your comment is regarding the pullback on AAPL shares, might want to look at the overall market and realize that AAPl slid because EVERYONE slid.

    The PE is a bit high but it seems to bump DOWN every time Apple announces earnings and that’s why people DONT think it’s too high.

  3. Pullback? PULLBACK?

    Last year at this time AAPL was $80+ per share. Year/year, 100%+ on my money is just fine (and today, yesterday’s “pullback” is just about all gone).

    FYI: Gene Munster is the only analyst who knows his AAPL from a hole in the ground.

  4. @@doc and moo

    PE means price to earnings ratio. I stated this with the price at 170, and it still holds true at the current price.

    AAPL PE = 46.87

    Description 1 Day Price
    Change % Market
    Cap P/E ROE % Div. Yield % Long-Term Debt to
    Equity Price to
    Book Value Net
    Profit Margin % (mrq) Price to
    Free Cash Flow (mrq) More
    Info
    Sector: Technology -0.55 6212.3B 28.36 13.54 1.80 0.85 7.42 8.85 29.79 N/A
    Industries
    Computer Based Systems -2.05 2.5B 0.00 0.00 NA 1.16 3.03 -3.90 -305.60 More Info
    Internet Information Providers -1.25 276.0B 0.00 12.70 2.68 0.12 8.85 18.30 93.20 More Info
    Semiconductor- Memory Chips -2.65 46.6B 0.00 0.00 0.00 0.26 1.68 -1.90 -15.70 More Info
    Wireless Communications 0.00 1095.7B 0.00 0.00 2.01 0.47 10.59 -3.70 64.70 More Info
    Telecom Services – Foreign 2.73 726.6B 12.50 21.10 2.47 1.49 9.06 10.10 -64.50 More Info
    Long Distance Carriers 1.06 37.3B 13.30 26.50 2.20 1.00 4.76 16.60 26.20 More Info
    Diversified Communication Services -1.34 193.1B 13.50 8.50 5.36 8.94 -6.75 5.70 -40.40 More Info
    Diversified Computer Systems -0.60 320.6B 19.30 26.20 0.91 1.17 15.91 7.80 163.90 More Info
    Telecom Services – Domestic -0.18 481.7B 20.00 11.20 3.51 0.81 -22.13 9.20 137.40 More Info
    Scientific & Technical Instruments -1.42 148.4B 20.80 14.10 0.39 0.55 8.94 14.30 -45.90 More Info
    Semiconductor Equipment & Materials -1.64 93.5B 21.10 16.00 4.48 0.21 3.46 13.10 60.60 More Info
    Information Technology Services -1.55 56.2B 21.80 11.10 0.68 0.35 7.12 4.20 -1310.00 More Info
    Data Storage Devices -0.42 92.0B 23.10 14.60 1.53 0.30 6.78 9.30 65.00 More Info
    Information & Delivery Services -1.04 19.7B 23.70 39.50 1.07 1.88 262.59 14.50 52.50 More Info
    Application Software -1.37 556.5B 23.90 30.80 0.96 0.42 16.26 23.80 50.00 More Info
    Communication Equipment 0.37 468.9B 24.20 15.90 1.05 0.19 6.62 9.70 -95.60 More Info
    Personal Computers -1.91 206.1B 25.30 20.90 0.00 1.15 10.04 9.30 46.00 More Info
    Networking & Communication Devices -1.64 231.5B 29.90 16.30 0.41 0.20 9.60 17.40 42.20 More Info
    Semiconductor – Integrated Circuits -3.33 156.9B 31.20 10.30 3.15 0.21 3.36 13.20 124.60 More Info
    Healthcare Information Services -1.92 11.8B 34.00 31.80 2.60 0.77 10.77 23.00 -65.70 More Info
    Technical & System Software -3.34 77.1B 39.50 15.10 0.49 0.22 9.10 14.20 77.10 More Info
    Semiconductor – Broad Line -1.91 277.2B 39.90 8.70 1.41 0.26 3.87 8.40 0.00 More Info
    Business Software & Services -2.69 184.0B 40.30 13.40 1.30 0.17 12.59 9.80 277.00 More Info
    Semiconductor – Specialized -2.54 87.2B 40.50 11.00 1.51 0.26 6.36 12.90 59.40 More Info
    Internet Service Providers -3.18 5.0B 41.60 16.40 NA 1.32 16.27 6.50 -374.30 More Info
    Security Software & Services -1.97 18.2B 47.70 7.00 0.00 0.37 5.37 13.50 -524.30 More Info
    Printed Circuit Boards -1.01 19.7B 61.30 2.20 1.23 0.32 2.29 0.70 -33.60 More Info
    Internet Software & Services -1.13 79.2B 77.20 4.10 0.36 0.18 16.74 5.50 -136.50 More Info
    Computer Peripherals -1.86 45.4B 97.50 4.30 0.12 0.60 3.14 2.90 175.40 More Info
    Diversified Electronics -1.27 138.9B 220.10 0.20 0.81 0.33 2.96 0.10 190.70 More Info
    Processing Systems & Products -0.35 21.7B 341.30 0.70 0.11 0.87 7.72 0.30 -28.40 More Info
    Multimedia & Graphics Software -1.58 36.9B 578.00 0.60 1.46 0.43 5.14 0.50 -36.10 More Info

  5. Is AAPL overpriced? No, here’s why.

    Let’s do some math. Over the last 4 quarters, AAPL has earned $3.55 per share. That makes earnings $3.09 billion earnings without the iPhone.

    What kind of boost do we expect from the iPhone?

    Let’s say that AAPL makes $300 profit on every iPhone ($150 from the sale of the phone and $150 from the contract with ATT and/or others). If AAPL sells its target of 10 million iPhones, they boost their earnings by $3 billion dollars. That’s a forward P/E of 23.8

    I’d say that’s a respectable P/E for a company that makes soap. For a company that has room to grow, it’s a bit low. Based on these numbers, $200 stock price seems reasonable (P/E is 28.6).

    Are my estimates of AAPL’s profits on the iPhone too high? Should I also account for AAPL’s sales growth in PCs and iPods?

  6. aapl PE = 46.96

    If you consider that OK, it is your decision, and is this a great country or what?

    As for making soap, the list I posted above consist of a VERY broad section of tech companies, and the average pe is 61.953125. After all, over 6 billion people do not own any Apple product. Lots of room for growth. On the other hand, maybe all of the people that can afford the products already own them! What to do?

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