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.
Great, just bought a bunch more.
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)
second post… hi hi
better late than never. Oh and I predict it’s will rain today and guess what it already is.
New post are locked out on the Goldman-Sachs upgrade of yesterday, so I’ll post this here (it still holds true):
Told ya. The pe is too high.
What? The P/E is too high . . . meaning . . . ?
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.
Wow, Apple’s stock is sitting close to 170, so Morgan Stanley raises their stock prediction from 150, to a possible 180!
Such intellectual courage, Morgan Stanley!
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.
@OctoberMac
thanks for writing my post, saves me time
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Consultants are people who take the watch off your wrist, then tell you the time.
@@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
I bought Apple at $7 Wish I had mortgaged the house and invested it all.
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?
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?
BTW, over how many quarters will that 3billion be spread?
Also, the 1yr forward pe is 37 right now.
Enough of you. Go back to bed.
Too crowded there right now.
Ozzy quote:
“Bubbles! Oh come on Sharon! I’m f*cking Ozzy Osbourne, I’m the Prince of f*cking Darkness. Evil! Evil! What’s f*cking evil about a shitload of bubbles?”
I heard they doubled Target’s Apple price!
http://www.target.com/Double-Apple-Kitchen-Dining-Collection/dp/B000JIKR2Y/sr=1-1/qid=1192218340/ref=sr_1_1/601-4500106-7069766?ie=UTF8&index=target&rh=k:double apple&page=1
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
– Irving Fisher, Ph.D. in economics, Oct. 17, 1929
Doc,
In your opinion, why does aapl’s current growth rate NOT justify the current p/e ratio?
If this growth rate doesn’t, what growth rate would?
Lee
@Lee
P/E is an indicator of earnings, not growth. I agree that Apple has had excellent growth, and I hope that it continues to do so. I have enjoyed using the products for 20 years and have 5 cpu’s and 2 ipods. That being said; The market nor any stock, as a general rule, will go always and only up or down. An indicator that can be used in judgements about the question regarding current valuations of a stock price is P/E.
Apple growth can not continue into the future forever. The fact of the matter is, the greater the growth, the harder it is to continue the growth. A historical example of this can be found in shaving equipment. Years ago, manufactures discovered that once a man had purchased a razor (you could sharpen these and the blades were not replaceable) he may never buy another. We now have replaceable blades in razors with one, two, or three blades. Some have no replaceable blades, but the entire device is discarded once the tiny cheap non-replaceable blade is dull. I am sorry I do not know more about shaving equipment used by women, but I am willing to learn.
What has all of this got to do with growth? Liked I mentioned earlier, more than 6 billion people do not have an Apple product, so there is lots of room for growth. The real question is not weather growth can continue, but is the RATE of growth sustainable. Forward P/E can be used to make judgements about this, and Apple has good prospects in the furture, if macro economic factors do not change. This is the rub. I am not bullish about macro economic outlook. I do know that even if the economy has a downturn people will continue to buy stuff, but will they buy what they perceived, rightly or wrongly, the expensive stuff?
Another thing, many of the price targets that we see are for the NEXT YEAR!
@doc
I get it. You fear the future. The economy is going south and the bubble in the tech industry will burst.
As for AAPL, you don’t give any specific reasons why AAPL is overvalued. In fact, you give a mixed picture when you say AAPL has room to grow and we should consider if AAPL can grow fast enough to justify its P/E.
I’ve provided numbers to show that AAPL is not as overvalued as the current P/E indicates. Challenge my numbers or provide your own. Otherwise, state your fears in a sentence or two and save bandwidth for something more important than your entertainment.
3 billion will be spread over 8 quarters. But once an iPhone is sold and the contract is signed, the profits are secured and they will make it into the books. Don’t try to obfuscate (look it up).