How $10 billion gets Apple’s stock to $750

“For almost two years, every market participant (I won’t say expert) has had an opinion of what was wrong with Apple (AAPL),” Wall Street Playbook writes via Seeking Alpha. “Apple was everyone’s punching bag. Until last week happened.”

“All of a sudden, following Apple’s blowout quarter, everyone is proclaiming how they’ve been right about Apple. The company’s future is now ‘favorable.’ But consider, even when things appeared gloomy, Apple had never missed its own estimates,” WSP writes. “In fact, for -now – four consecutive quarters, Tim Cook has met or beaten the midpoint of his guidance. But even with Apple’s recent surge, the stock remains considerably undervalued to both the company’s near term and long-term potential.”

“Beyond the company increasing the size of its capital return program by $30 billion, Apple has promised it will enter a new product category this year. The rumors center around the iWatch,” WSP writes. “As it stands, the wearable tech industry (watches) has gross margins ranging from 50% to 60%, according to Bloomberg. This fits right into Apple’s core. And assuming that Apple can achieve 10% to 15% market share, which is conservative, this can immediately become a $10 billion revenue stream… From my vantage point, there is still potentially 30% upside, which places the stock right around $750, $27 shy of Apple’s highest price target of $777. This means 7:1 split-adjusted price target of $107.”

Read more in the full article here.


  1. And assuming that Apple can achieve 10% to 15% market share, which is conservative, this can immediately become a $10 billion revenue stream

    That’s a mighty big assumption. That’s like saying the entire market for a $100 iWatch-like device is 1 Billion people per year. Adjust that however you’d like, $200 at 500 Million per year or $50 at 2 Billion per year; or anywhere in between.

    I don’t see that happening with this market.

    People need to set realistic expectations for what success means with something like an iWatch. To me it seems like a much lower retail price at some fraction of the volume of the iPhone.

    The impact the iWatch has in terms of the halo effect of the ecosystem may end up bringing in more revenue than direct sales of the iWatch itself. See CarPlay.

    1. I see 50 million units at 300 per unit.
      15 billion in rev… Aprox 5 billion in earnings !
      Aggressive but Very realistic imho
      And that is just the iwatch.
      Sure there are more things coming !

      1. 50 million at $300??? That’s pretty insane.

        50 million would represent 1/3 of iPhone owners each year at the current rate. Many of these iPhone purchasers are purchasing iPhones free with contract or $99, or $199. They’re going to pay $300 for a watch accessory to go with their iPhone?

        And while they can get a new free (or cheap) iPhone with contract every two years, they’re going to pay $300 each time for a watch to go with it?

        I highly doubt it.

        And that’s insanity even if the iWatch is the magic device instead of a fitness band type device that it may end up being.

        Really, setting expectations that high will result in a perceived failure when much lower but reasonable expectations can reflect absolute success in this field.

  2. That analysis only works if one assumes that the total spent on wrist devices remains the same after introduction of an iWatch. In other words, that it’s a zero sum game and that money spent on an iWatch must be subtracted from total watch sales. That is a terrible assumption.

  3. The other side of things is ignored by the press, because they aren’t getting “leaks” from suppliers.

    Apple’s MacPro was stunning when announced. No one saw it coming, yet it makes perfect sense. For every user who wants 10 expansion slots, there are 10 times as many who want none, given the Thunderbolt connections.

    We have yet to see the next evolution of the MB Air and Pro laptops or the potential integration of both iOS and OSX into a new model that might be a ‘PadPro’.

    How? Right now we have two palm rests which could be LCD touch screens! You could let iOS & OSX populate either or both screens for ancillary work and notifications.

    It WILL come. When it does, Apple’s stock will have another big jump.

Reader Feedback

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