Goldman Sachs adds Apple to ‘Conviction Buy List’ and ups price target

“Goldman Sachs’ David Bailey added [Apple (AAPL)] stock today to the firm’s ‘Americas Conviction Buy List,’ and upped his price target to $220 from $185,” Eric Savitz blogs for Barron’s.

“Bailey said the move is intended to ‘capture the catalyst around the 3G iPhone launch next month and the upside potential from sharply higher projected iPhone sales in the back half of the year,'” Savitz reports.

“Bailey says he continues to see calendar 2008 iPhone unit sales at 11 million, ahead of the company’s 10 million unit target. He also expects continued stellar Mac growth, with units expanding at 3x the overall PC market,” Savitz reports.

Full article here.

6 Comments

  1. @Martin

    A buying opportunity followed by full recovery when the thing does launch. Anyone who doesn’t already own the stock should hope for this scenario. For anyone who does own the stock, well, tech stocks can be a nauseating ride sometimes, get used it.

  2. @Martin: Well, that depends on how much of the 3G iPhone revenue/profit catalyst is already reflected in today’s $180 price.

    I think some of it’s already priced in; in other words, if there is no 3G iPhone in June, the stock will drop but stabilize around $160. But if there is a 3G iPhone, the stock will rise, likely into the $220s or more. So what are the odds there is no 3G iPhone in this quarter? And even if there’s no 3G iPhone in June, it’s a short-term drop as it’s nearly certain that there will be a 3G iPhone sometime this year.

    But if you do the math, the tough quarter y-o-y for Apple will be Sep-Dec. Assuming consistent 20-30% y-o-y Mac sales growth, they’ll need an iPod rejuvenation, iPhone sales way over 10M (or more carrier revenue-sharing), or a new high-buzz product to keep profit rising at the over 30% clip expectation that’s already priced into the stock. But that’s still a ways off so let’s just see what happens in June first.

  3. So the “Conviction Buy List” is the list of companies whose stocks will become much cheaper after their CEOs are convicted of options backdating and other irregularities.

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