“Before Apple Inc. shares cracked $100 six months ago, fund manager Stephen Coleman predicted they would surpass $200 by year-end. His post on the Web site Seeking Alpha drew ridicule from other investors,” Connie Guglielmo reports for Bloomberg. “‘I was called a fool and worse,’ said Coleman, founder of Daedalus Capital LLC in St. Louis, an Apple holder since 2004. After a 67 percent rise in fourth-quarter profit, the shares reached a record $191.79. Analysts say they will keep rising.”
MacDailyNews Note: At the end of last month, the same Stephen Capital said that Apple Inc. shares will rise further, “going to $600,” although no specific time frame was given at the time. Now, Guglielmo reports, “Coleman, using more aggressive cash-flow predictions for the iPhone, says the shares will reach $600 in 18 months.” [Thanks to MacDailyNews Reader “Macaday.”]
Guglielmo continues, “Chief Executive Officer Steve Jobs jumpstarted optimism about the power of the iPhone, the $399 Web-surfing mobile device he introduced in June, to generate a steady flow of cash. Analysts are revaluing the stock because each sale brings Apple a cut of monthly wireless service fees from AT&T Inc., and sales of the phone are recognized over 24 months.”
“This has led analysts including Credit Suisse’s Robert Semple and Deutsche Bank’s Chris Whitmore to use multiples of cash flow rather than earnings to estimate Apple’s stock price, reflecting an anticipated pileup of deferred revenue. Twelve analysts raised their estimates above $200 last month, even as earnings per share multiples reached their highest in two years,” Guglielmo reports.
“Jobs, 52, hasn’t made it easy for analysts to create their models. Apple doesn’t disclose its wireless cut or whether it gets an up-front payment for each two-year contract from San Antonio-based AT&T Inc., the largest U.S. wireless carrier. AT&T charges $60 to $220 a month,” Guglielmo reports. “Estimates of Apple’s monthly take vary from $10 to $20 per subscriber. Cash and short-term investments at Apple rose by $2.9 billion, or 12 percent, to $15.4 billion in the fourth quarter from the third in the first full period of iPhone sales.”
Guglielmo reports., “Piper Jaffray & Co. analyst Gene Munster bases his $250 estimate, the highest on the Street, on 25 times ‘booked’ profit of $9.50 a share in calendar 2009, higher than his $7.06 estimate for reported earnings. ‘The shipments in any given quarter are laying the foundation of what’s going to happen in the future,’ said Munster, who recommends buying Apple shares. ‘People are having trouble getting their arms around it because they think it’s too good to be true.'”
Much more in the full article here.
[Thanks to MacDailyNews Reader “Mike in Helsinki” for the heads up.]