The Case For $500 Apple (AAPL) Grows
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Price: $290.07 -3.8%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
EPS Growth %: +19.7%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
EPS Growth %: +19.7%
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A consensus is building that Apple (Nasdaq: AAPL) is an undervalued stock... in fact a very undervalued stock.
On October 13th, StreetInsider.com was the first to suggest that Apple is a $500 stock. We made the case that Apple could earn $22.40 per share in FY11. If you slap Apple's average multiple of 23x, you get to a price of $515.20.
StreetInsider.com's $500 price target was shortly followed by a sell-side analyst putting out the same target. On October 15th, Hudson Square Securities also placed a $500 price target on Apple.
Now, today there are two market pundits helping make the case for a $500 stock.
On Mad Money, Jim Cramer said he believes Apple can earn $22 per share in FY11. Cramer offered a PE of just 15x, but said based on this the stock should be worth extra $22 - TODAY. He didn't offer a longer term price target.
Today on CNBC, hedge fund heavyweight Julian Robertson said Apple should be valued at 25x-30x 2011 earnings. While Robertson didn't give a specific price, his aggressive multiple would suggest a price of of $475-$570 based on the current FY11 EPS consensus of $19. If you were to plug in the $22 FY11 EPS, expected by StreetInsider.com and Jim Cramer, this gets you to $550-$660.
While these $500+ price targets on Apple are still the fringe, more and more they will become the consensus.
Ex-Hudson Square, most sell-side analysts are still below the $400 level. However, illustrating that even the sell-side is quickly moving higher, Robert W. Baird initiated coverage on Apple today with an Outperform rating and $410 price target. With this new $400+ price target, the average price target among sell-side analysts has moved just above $370.
Shares of Apple are up 1.8 percent today to $318.42, after briefly tapping a new all-time high of $320.18 earlier.
On October 13th, StreetInsider.com was the first to suggest that Apple is a $500 stock. We made the case that Apple could earn $22.40 per share in FY11. If you slap Apple's average multiple of 23x, you get to a price of $515.20.
StreetInsider.com's $500 price target was shortly followed by a sell-side analyst putting out the same target. On October 15th, Hudson Square Securities also placed a $500 price target on Apple.
Now, today there are two market pundits helping make the case for a $500 stock.
On Mad Money, Jim Cramer said he believes Apple can earn $22 per share in FY11. Cramer offered a PE of just 15x, but said based on this the stock should be worth extra $22 - TODAY. He didn't offer a longer term price target.
Today on CNBC, hedge fund heavyweight Julian Robertson said Apple should be valued at 25x-30x 2011 earnings. While Robertson didn't give a specific price, his aggressive multiple would suggest a price of of $475-$570 based on the current FY11 EPS consensus of $19. If you were to plug in the $22 FY11 EPS, expected by StreetInsider.com and Jim Cramer, this gets you to $550-$660.
While these $500+ price targets on Apple are still the fringe, more and more they will become the consensus.
Ex-Hudson Square, most sell-side analysts are still below the $400 level. However, illustrating that even the sell-side is quickly moving higher, Robert W. Baird initiated coverage on Apple today with an Outperform rating and $410 price target. With this new $400+ price target, the average price target among sell-side analysts has moved just above $370.
Shares of Apple are up 1.8 percent today to $318.42, after briefly tapping a new all-time high of $320.18 earlier.
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