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.
Prospered in last year's economic storms, prepared for even rougher weather ahead
"During 2011," writes Ticonderoga's Brian White in a note to clients Tuesday, "Apple was the best performer in our universe of twenty companies, rising by 26%."
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An analyst looks at Apple as an investment opportunity today and likes what he sees
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Sony's tablet could be the next to stumble, says another
Wall Street's best and brightest are expressing varying degrees of shock at the news Thursday that Research in Motion (RIMM), which delivered 500,000 BlackBerry PlayBook tablets in the quarter that ended in May, shipped a dismal 200,000 in the August quarter -- suggesting that most of those first half-million units are still sitting, unsold, on store shelves.
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Greeted with long lines and stock outs when it arrived in Hong Kong this week
In a note to clients Friday, Ticonderoga's Brian White reported that the new MacBook Air -- which was launched in the U.S. more than four weeks ago -- was greeted with long lines and stock outs when it finally arrived in Hong Kong this week.
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One analyst, anticipating a 100+ point run-up over the next 3-5 months, believes it does
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What is it with the Chinese and their iPhones?
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No wonder Apple (AAPL) decided several years ago to make China MOREPhilip Elmer-DeWitt - Jan 22, 2011 6:31 AM ET
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