The Case for Apple at $1,000

There's no shortage of Wall Street bulls when it comes to Apple (Nasdaq: AAPL  ) , with but one lone bear that was and is still dead wrong. Shares are already up nearly 44% year to date to roughly $582 as of this writing, and analysts are still getting even more bullish of late.

In the wake of the most recent blowout quarter and subsequent new iPad unveiling, analysts have been scrambling to raise price targets and pound the tablet with "buy" ratings. Once upon a time, the Street's highest price target was $700, which seems entirely within reach at this rate. Well, we now have a new king of the price-target hill ... sort of.

Morgan Stanley's Katy Huberty has gone ahead and reiterated her "overweight" stance on the stock, along with boosting her price target on shares to a healthy $720 and adding it to the company's "Best Ideas List." She's also notching up her EPS estimates but believes that "investors still underestimate the potential earnings upside at Apple."

Huberty includes a handful of potential catalysts in the near future that she's pricing in, including increased enterprise adoption driven by the iPad 2's recent price cut, a strong upgrade cycle to 4G LTE for this year's iPhone, and massive emerging-market opportunities.

That $720 price target? That's just her base case. Just wait until we get to the bull case. Here are some possible contributors to her bull case: New product categories like an Apple TV set or low-end iPhone, 2013 iPad shipments predicted to reach as high as 129 million units, current iPhone growth estimates excluding China that only assume normal upgrade and new subscriber activity, and the possibility for price multiple expansion that could be driven by a possible dividend.

Under this scenario, Huberty sees calendar 2013 EPS of $80 with a price target of $960. That's right, just shy of a grand per share. With 932 million shares outstanding, we'd be looking at a market cap of almost $900 billion.

Remember when I loosely conjectured that EPS of roughly $72 (assuming no price-multiple compression or expansion) could be enough to get Apple to a trillion-dollar market cap? Well, it seems my numbers games aren't too far off from Huberty's models.

If Apple can reach $960, hitting the magical $1,000 per share would be just around the corner.

Despite Apple's impressive run and massive growth opportunities, it actually doesn't earn the title of The Motley Fool's Top Stock of 2012. That award goes to a hot retail player that's tapping into emerging markets and whose business model you're no doubt familiar with. Get the free report now.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 14, 2012, at 11:24 PM, stdcrd12 wrote:

    Stay bulish on Apple!! Some believe it may be a trend, but this trend has at least a 5 year stretch...betting against this juggernaut will only make you loose sleep while people everywhere line up to provide Apple with signifigant profit margins!

  • Report this Comment On March 15, 2012, at 5:52 AM, kramsigenak wrote:

    Evan,

    And why not? Someone compared Apple to the tulip craze of the 1600s, this was my response;

    While that is clever, I have a question for you: do tulips make phone calls, book reservations online, take photos, get directions, tell you the weather, check your stocks, email or text your family and friends, take video, research business ideas, have an audio digital assistant (Siri ), have a calculator, a flashlight, a compass, a voice memo, a notepad, a reminder, a clock, a timer, an alarm, a record collection (iTunes), a calendar, a book store, an app store (with 500 thousand apps), video games, YouTube, email, all my contacts neatly organized, Internet radio, TV, movies... Did I leave anything out?

    Mark Kanegis

  • Report this Comment On March 15, 2012, at 9:23 AM, lucasmonger wrote:

    I'll bet Steve Ballmer wishes he could take back his comments made about the original iPhone in 2007 and how he thought Microsoft had a strong product offering... boy was he completely wrong. Years late to the game, they finally have a Windows Phone with almost no market penetration and almost no tablet business. My how the tides have turned on our favorite monopoly to hate.

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