Welcome to the land of the four-digit price targets, Apple
Yesterday, it was Topeka Capital Markets analyst Brian White, picking up coverage of the tech giant at his new firm with a $1,001 price target.
This morning, it's the more visible Gene Munster from Piper Jaffray upping his Apple goals.
Munster -- who has been astute in his Apple bullishness and was talking up Apple's plans to enter the actual HDTV market with an Apple smart television back when it seemed like a crazy notion -- is raising his 12-month target from $718 to $910.
Is $910 by early next year an outrageously high projection? It may be, but it's actually based on Munster's forecast for Apple to earn $65.04 in the 2014 calendar year (in other words, the final three quarters of fiscal 2014, and the first quarter of fiscal 2015 covering the 2014 holiday season). At a price of $910, Apple would be fetching a reasonable 14 times the following calendar year's bottom-line results.
However, not to be outdone by White's call, Munster believes that Apple's stock will hit quadruple digits at some point in 2014. Depending on the aggressiveness of Apple's planned share repurchases for fiscal 2013, Apple would command a cool $1 trillion market cap shortly after crossing $1,000.
No company has ever hit a market cap in the 13 digits. No company has even come close.
Apple's already closing in on the all-time record. Microsoft
Will Apple get there or simply repeat Mr. Softy's mistake?
The Apple difference
I recently argued that it's different this time, ruffling the feathers of those who believe that history always repeats.
For starters, Microsoft -- like many of its bubbly peers -- was ridiculously overvalued at the time. As high as Apple has run, it's really only trading at a forward earnings multiple in the low- to mid-teens. Microsoft didn't peak as a result of any mistakes on its own. It's actually a larger and more profitable company today than it was back then. The stock simply peaked prematurely because of investor mistakes.
Apple isn't just making money off old things. It has created entirely new categories. When someone wants a tablet, that person really wants an iPad. What Apple has never managed to accomplish in terms of market share in personal computing it has achieved with the "good enough" iPad that is replacing laptops around the home, textbooks in the classrooms, and clunky interfaces at consumer-facing retail establishments.
How about the iPhone? Regardless of the carrier-subsidized price that you're paying, Apple is making more than $600 on every handset sold. There's no way that you can compare Apple to Finland's Nokia
Either way, the world is changing. Of course things are different this time. Smartphones and tablets -- two categories that didn't exist for Apple five years ago -- now account for 63% of its sales.
Revolutions happen, and value propositions change.
See you at $658, Apple. The other milestones will follow in time.
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