Pacific Crest analyst ups Apple price target to $235; estimates $350 iPhone subsidy

“Pacific Crest’s Andy Hargreaves this morning raised his price target on Apple (AAPL) to $235 from $225,” Eric Savitz blogs for Barron’s.

“The moves reflect his bullish views on the prospects for the iPhone,” Savitz reports.

“Hargreaves also says that, while he is not changing his current unit forecast, there is the potential for ‘significant upside’ to his current fiscal 2009 iPhone unit estimate of 15.5 million,” Savitz reports. “(Some estimates on the Street are actually much, much higher.)”

Full article, in which Savitz also reports that Hargreaves estimates AT&T to be paying Apple an average $350 per iPhone subsidy, here.


  1. Subsidy of $350 sound quite healthy. If Apple spends about $150 to make and ship these, then they’ll be making $400 for every iPhone sold.

    If they sell as many as Gene Munster expects them to sell, that means that in 2008, they’ll add $4 billion of profits to the bottom line. And for 2009, again, if Gene is right, iPhone alone could be responsible for $16 billion dollars in profits.

    I’m having a hard time wrapping my mind around that one (their entire 2007 profits were around $4 billion).

  2. With a grain or salt people. By many of the economic pundits the stock should have been at $235 by now, but economic drag and negative speculation by some have managed to keep it down. Although I have to say with Iphone distribution now in 70 countries, even if they only average 500,000 per country over the next 2 quarters. That would be 70×500,000x$350=$12.25 Bil in pure profit just due to iphone.

    Now that Itunes movie rentals has begin to take off, laptops are going full tilt, ipod touches will be for the rest of us who are allergic to the local carrier but still want an internet appliance that does most of what the Iphone does and plays our portable movies and music I expect Apple to blow away the forecast over the next 2 quarters. It still didn’t work for them last quarter so unless the world economy chabnges and oil drops by $50 per barrel I wouldn’t look too closely at $230 per share.

  3. i think apple will sell 10 million phone in the next 2 quarters alone and 40 million in 2009. but as much as that sounds it doesn’t add THAT much to the bottom-line as some of my fellow citicens here suggest. let’s assume i am right and they sell 40 billion in 2009 for an average price of $550 a piece (i think at&t;has to buy it for that price and how much they subsidize it is up to their own as higher subsidizes here in europe suggest). with an average components-greaterprice of $170 (latest isupply-study) + 50 in r&d;, marketing, transportation etc. that makes a profit of about $330 a unit before taxes (roughly 30%) which makes a net profit of 8,8bn for the iphone in 2009. but only 50% of that will be accounted for in 2009, which makes 4,4 bn in net profit or $5 a share MORE than all the analysts now predict. eighter that or my math is totally flawed.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.