Collins Stewart Initiates Coverage on Apple (AAPL) with a Buy

January 7, 2009 9:02 AM EST

Collins Stewart initiates coverage on Apple (Nasdaq: AAPL) with a Buy. Price target $117.

Collins analyst says, "The heavily subsidized smart phones remain the sole bright spot in an otherwise anemic handset market. While iPhone remains the category leader, momentum has waned as telegraphed by the recent production order cuts. Never a player in commercial accounts, Apple seems to be doing everything right in PCs. Their products have the most attractive designs and work almost effortlessly...Our price target reflects an 18x on normalized pro forma earnings of $5.00 plus net cash of $27 per share. The 20% multiple premium over the historical median market valuation is warranted given the company's strong cash generation and anticipated share growth in target markets. While there continues to be uncertainty on Jobs health, Apple has a deep management bench that can help maintain its leadership in the years ahead. Primary risks are continued softness in consumer spending and lack of management succession plan."

Apple Inc. designs, manufactures, and markets personal computers, portable digital music players, and mobile communication devices and sells a variety of related software, services, peripherals, and networking solutions.

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