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THE APPLE INVESTOR: Analysts Going Hog Wild About iPhone 4

THE APPLE INVESTOR: Analysts Going Hog Wild About iPhone 4

AAPL Up Marginally
Shares of AAPL are up slightly this morning. The stock’s recent surge has been driven by the extraordinary demand for the iPhone 4.  Future catalysts for the stock include the physical availability of the iPhone 4 on June 24th (although supplies will be severely limited as pre-order sales are now pushed out until July 2); monthly NPD data (Mac / iPod business); iPad sales updates; and June quarter earnings likely the third week in July. AAPL trades at 23x estimated fiscal-year 2010 EPS and 13x Enterprise Value / Trailing Twelve Months Free Cash Flow.

Analysts Weigh In On Apple’s Blowout First Day iPhone 4 Sales (Various)
Apple announced that it received 600,000 pre-orders for the iPhone 4 on its first day.

• Gene Munster at Piper Jaffray now has increased confidence in his recently upwardly revised June and Sept. quarter iPhone estimates (both at 9.5 million units). He reiterates his Overweight rating and $348 price-target.

• J.P. Morgan analyst Mark Moskowitz believes that the iPhone 4 pre-order activity foreshadows another big growth story in the making. He thinks it is likely that Apple can ship 10 million iPhones in a quarter in calendar 2010. Apple remains his top pick with an Overweight rating.

• Katy Huberty at Morgan Stanley sees the iPhone installed base rising from approximately 30 million subscribers at the end of 2009 to over 100 million by the end of 2011. Reasons: 1) hardware redesign; 2) “stickiness” of the installed base; 3) iOS upgrade potential; 4) AT&T incentives; 5) installed base maturation.

• Jeffrey Fidcaro at Susquehanna is raising his estimates it reflect 9.4 million iPhone units sold in the June quarter. Additional upside this year could come from a CDMA Verizon iPhone as well as international sales. He is raising his price target to $335 and has a Positive rating on the stock.

Shares Of AAPL Will Plummet 80% to $45 Says Hedge Fund Model (Street Insider)
Behavioral Analysis Model predicts future price movements in human traded markets through the study of market participants’ emotional responses during periods of high emotion and “capitulation” (whatever the hell means). The model is now predicting shares of AAPL will get destroyed, falling 80% to $45 this fall, coinciding with a broader market crash. While BAM Investor has had some freakishly correct predictions, they might want to tweak a few algorithms on this one.

To Take Advantage Of The iPhone Frenzy, Establish A Covered Call Position (Wall St. Nation)
With iPhone and iPad growing sales 40% last year and 65% last quarter alone, investors might want to think about picking up some shares of AAPL to capture future upgrade cycles. If you don’t believe the world is going to fall apart this fall, a good strategy for picking up shares of AAPL would be to buy 100 shares of Apple in a pullback around the $264 range and sell the July 2010 $270 Call, establishing a covered call position.

Investors Value Apple More Than Microsoft For Its Innovation (Fortune)
Why are investors willing to pay more (a lot more) for a dollar of profits at Apple than at Microsoft? The market rewards Apple for its future growth, which the market expects will be higher than Microsoft’s. Microsoft is growing too, however it has been reprimanded for its recent fumbles (search, mobile). The real answer is that premium investors are willing to pay for Apple’s innovation. What’s next: televisions, automobiles, oil spill clean up machines, etc.

Forrester Predicting iPad Sales Will Fall Off A Cliff (Forrester Research)
The research firm is sending mixed messages. While Forrester believes that tablet computers will cannibalize netbooks and overtake them in sales by 2012, the company estimates that U.S. sales for tablet computers (from all manufacturers) will total 3.5 million in 2010. Apple has already sold 2 million iPads. So they’re also saying that Apple and the rest of the copycats will only sell 215,000 tablets per month for the remainder of the year? Time to revisit that logic.

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