Can Cautious Comments On Apple's (AAPL) Q4 Overshadow Calls to $500?
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Price: $309.35 -0.63%
Rating Summary:
45 Buy, 28 Hold, 9 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
45 Buy, 28 Hold, 9 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Long-time Apple (Nasdaq: AAPL) bull Gene Munster of Piper Jaffray is throwing a little cold water on new calls for the stock to go to $500.
In a note to clients today, Munster, considered the axe in the stock, is suggesting that the company could just meet the Q4 EPS whisper number instead of beating it.
Apple reports after the close Monday, October 18.
Munster said assuming a typical 'beat' from Apple the company would have to report EPS of $4.80. He says due to iPhone, and iPad supply shortages don't expect this to happen.
He explains that in order to get to $4.80 in EPS on $18.8 billion in revenue, Apple would have to post a gross margin of 43%. This would be well ahead of the 39.1% Apple posted in the June quarter, and also well ahead of the company guidance of 35% and consensus of 38%.
While Munster is cautious on this quarter's 'beat', don't think for a second that the man is turning on Apple. Muster says the printed number for the iPhone and iPad are less relevant than usual given the lack of supply. He said over the next three months, investors will become increasingly more optimistic that the Street revenue growth in FY11 of 26% year-over-year is "conservative." He is maintaining his Overweight rating and $390 price target on Apple.
Muster has been one of the most accurate analysts on Apple, and is up 1788% from his original call in 2004, according to data from StreetInsider.com's Rating Central.
The street consensus for Apple for the quarter is $4.03, so even if they don't post $4.80 they will likely have a considerable 'beat.'
StreetInsider.com's views is that if EPS gets even close to the $5 level (within 20c-50c) it could make StreetInsider.com's call for $22.40 in FY11 EPS even more achievable.
If they can earn this amount in the next fiscal year (which has already started BTW) and trade at the current 17x multiple, the stock could move up to $380.80. Using Apple's average multiple of 23x on this number gets you to a price of $515.20.
Shares of Apple are up 2.4 percent today to $309.41.
In a note to clients today, Munster, considered the axe in the stock, is suggesting that the company could just meet the Q4 EPS whisper number instead of beating it.
Apple reports after the close Monday, October 18.
Munster said assuming a typical 'beat' from Apple the company would have to report EPS of $4.80. He says due to iPhone, and iPad supply shortages don't expect this to happen.
He explains that in order to get to $4.80 in EPS on $18.8 billion in revenue, Apple would have to post a gross margin of 43%. This would be well ahead of the 39.1% Apple posted in the June quarter, and also well ahead of the company guidance of 35% and consensus of 38%.
While Munster is cautious on this quarter's 'beat', don't think for a second that the man is turning on Apple. Muster says the printed number for the iPhone and iPad are less relevant than usual given the lack of supply. He said over the next three months, investors will become increasingly more optimistic that the Street revenue growth in FY11 of 26% year-over-year is "conservative." He is maintaining his Overweight rating and $390 price target on Apple.
Muster has been one of the most accurate analysts on Apple, and is up 1788% from his original call in 2004, according to data from StreetInsider.com's Rating Central.
The street consensus for Apple for the quarter is $4.03, so even if they don't post $4.80 they will likely have a considerable 'beat.'
StreetInsider.com's views is that if EPS gets even close to the $5 level (within 20c-50c) it could make StreetInsider.com's call for $22.40 in FY11 EPS even more achievable.
If they can earn this amount in the next fiscal year (which has already started BTW) and trade at the current 17x multiple, the stock could move up to $380.80. Using Apple's average multiple of 23x on this number gets you to a price of $515.20.
Shares of Apple are up 2.4 percent today to $309.41.
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