Tuesday, July 14, 2009

More On AAPL

Analyst Kathryn Huberty of MS is one of the most influential on AAPL. She recommended selling AAPL last September, thus sidestepping a big fall in the stock. Now she's turned bullish again - which of course I agree with. She sees the stock headed up from a current 142 or so to at least 180 again - the previous high - and just maybe 270 - within a year.

She's upbeat on the prospects for the iphone; but she's really high on AAPL's "core" (ha ha) Mac business. The signs are out there for a PC revival, but the biggest winner will most likely be the Mac.

Windows PCs will probably tread water the rest of the year, as buyers wait for Windows7. Then it looks like PC unit sales will trend higher, rising maybe 10% in 2010 as businesses finally face the need to upgrade.

But I think the Mac will be a big winner, even this year, as the company ramps up its typically strong back-to-school promotions.

They're already on the ascent, as recent Street research indicate Mac shipments on the commercial side rose 25% month-over-month in May, compared with market growth of just 1%. Huberty also sees unit sales growth for Macs in the 3rd and 4th quarters of about 10%, with a 15% increase for 2010.

Of course, these predictions could be wrong if consumer spending remains weak. And AAPL shares could fall quickly if Jobs' closely watched health takes a turn for the worse.

But assuming none of that comes to pass, AAPL certainly seems well-positioned for the months ahead. I look for EPS of about $10 a share for the year ending 9/30/2010 - well above most current estimates, which are currently under $7. The $180 number is simply based on her $9 projection times $9 a share. And AAPL has about $35 a share in net cash, and growing quickly.

If the iphone continues its gains and the Mac continues its growth as well, then I think AAPL could rise to between $250 and $300.

long AAPL

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