How exactly did Brian White come up with that number?
When last we heard from Ticonderoga's Brian White, a few hours after Apple (AAPL) reported its Q1 2012 earnings, he was reiterating the 12-month price target he had set the previous July: "Apple crushes even the most optimistic expectations," he wrote. "$666 here we come."
Two days later, Ticonderoga closed up shop.
On Monday White resurfaced at a new firm, Topeka Capital, with a new Street-high price target guaranteed to draw attention to itself: $1,001.
"Apple fever is spreading like a wildfire around the world," he wrote in Monday's note to clients, his enthusiasm for the company undiminished, "and we see no end in sight."
What's odd about White's new price target -- which is at least $201 higher than the most bullish of his colleagues -- is that the model supporting it is actually rather modest.
We know of four professional analysts who have called for higher Q2 revenues than White's $37.02 billion, nine with higher EPS numbers than his $10.06, and 15 with higher iPhone unit sales estimates than his 29.64 million. The only number that sticks out in White's spreadsheet is his estimate of 14.47 million iPads, which is higher even than all but two of the most bullish independent analysts.
So how did he get to $1001? By factoring in Apple's cash holdings, anticipating continued breakneck growth and using a P/E ratio from 2006-2010:
Our 12-month price target of $1,001.00 for Buy-rated Apple is based on just over 17x our interest expense/income adjusted CY13 pro forma EPS estimate plus net cash per share of $103.66. This equates to a straight P/E of just over 19x our CY13 EPS estimate and is below the mid-20 multiple of 2006-2010. In our view, Apple's valuation does not reflect the growth the Company has been able to deliver in recent years, nor future growth prospects. Between FY04-FY11, Apple grew sales by 44% per annum and increased EPS by 86% per year. Trading at a P/E (ex-cash) of just under 10x our CY13, we believe the stock still has significant upside potential.
Investors must have liked the sound of that. Apple's shares closed at $618.63, up $19.08 (3.18%) for the day.
What to make of those pesky forward-looking statements in today's earnings report
It used to be that traders rewarded or punished Apple's (AAPL) shares right after its earnings releases based not on the sales it reported for the past quarter, but on what the company said about the quarter to come. Apple tends to "guide conservatively," in the jargon of the trade, which Wall Street often interpreted as a disappointment.
But that MOREPhilip Elmer-DeWitt - Jan 24, 2012 7:24 AM ET
The 18% gap between the Street's estimates and the independents' suggests that it can
Last fall, a Wall Street analyst who shall remain nameless suggested in a note to clients that the days of the big Apple (AAPL) earnings surprises may be over.
He was referring to the string of quarterly reports in which the company beat the Street's estimates by measures so wide they were (or should have been) an embarrassment MOREPhilip Elmer-DeWitt - Jan 22, 2012 2:38 PM ET
With Q1 earnings due next week, the Street and the bloggers are now $4.5 billion apart
Perhaps professional analysts are just more comfortable underestimating Apple (AAPL). Perhaps they're still smarting from last quarter, when their numbers (for once) came in too high. Perhaps they're suspicious of reports that suggest that Mac and iPhone and iPad sales have never been so strong.
For whatever reason, Wall Street's estimates for what everybody seems to agree MOREPhilip Elmer-DeWitt - Jan 16, 2012 8:25 AM ET
Mark your calendars for what's expected to be a monster quarter
Apple (AAPL) investor relations has scheduled a conference call with analysts on Tuesday, Jan. 24 at 5 p.m. ET (2 p.m. PT) to discuss its first fiscal quarter results.
Given last summer's pent-up demand for the new iPhone that was finally released in October, this should be a big one.
The Street's consensus, as reported Tuesday by Thomson Reuters, is for earnings MOREPhilip Elmer-DeWitt - Jan 4, 2012 8:01 AM ET
If you ask about sales in the quarter that just ended, you get two very different answers
How did Apple (AAPL) do in the quarter that ended Saturday?
That depends whom you ask.
The consensus among nearly four dozen professional analysts, according to Thomson Reuters, is that Apple will report record earnings of $9.83 on record sales of $38.17 billion, up 52.8% and 42.7%, respectively, from the same quarter last year.
No way, say MOREPhilip Elmer-DeWitt - Jan 2, 2012 8:18 AM ET
We're averaging the Q4 estimates of the six analysts with the best track records
The chart at right, which compares Apple's (AAPL) reported earnings for the past six quarters with estimates made in advance of those reports, shows that some analysts are better at predicting the company's results than others.
Specifically, a group of independent analysts we've been calling -- for lack of a better term -- "the bloggers," have consistently out-performed MOREPhilip Elmer-DeWitt - Oct 17, 2011 7:11 AM ET
On this one, most analysts agree: Summer '11 was even bigger than Christmas '10
The Mac was one of the few products that failed to live up to expectations in the June quarter (Apple's fiscal Q3). Analysts were looking for sales of 4.2 million. What Apple (AAPL) delivered was 3.95 million.
That's not likely to happen again on Tuesday, when Apple reports its earnings for fiscal Q4.
Everybody seems to agree that MOREPhilip Elmer-DeWitt - Oct 16, 2011 10:23 AM ET
With Q4 earnings due next week, the pros and the bloggers are $3.9 billion apart
It has become, for the Street, an embarrassing quarterly tradition.
The Apple (AAPL) independent analysts -- a growing community of bloggers, private investors and assorted amateurs -- file estimates that look, by Wall Street's standards, outrageously optimistic.
But as the day of reckoning approaches -- in this case, Tuesday Oct. 18, when Apple is scheduled to announce its MOREPhilip Elmer-DeWitt - Oct 11, 2011 2:13 PM ET
For as long as we have been tracking them, the bloggers have trounced the pros
On Sunday, the day after Apple's (AAPL) fourth quarter of fiscal 2011 ended, we posted preliminary revenue and EPS estimates from both Wall Street's Apple analysts and a group of amateurs we've been tracking for a couple of years.
After we posted the chart, one reader who calls himself jmmxx suggested that it would be more interesting to see how MOREPhilip Elmer-DeWitt - Sep 26, 2011 7:19 AM ET
|Delinquent IRS employees paid bonuses by the agency|
|Court quizzes Aereo: Do TV streams break the law?|
|Gun silencer sales are booming|
|How women can narrow the 'confidence gap'|
|China factories extend slump|