Apple and the Return of the Gimmicky Price Targets

My price target for Apple ($AAPL) is $2275.  I got there by looking at a telephone keypad and taking the digits from the A, A, P and L of the ticker symbol.

Clever, huh?

Mark Robertson at Manifest Investing shot me an email this morning and noted the parallels between the current Apple price target steeplechase and what went on with Qualcomm in 1999 – it got to a point where every day analysts were elbowing each other out of the way, jostling to be the high target on The Street.  It didn’t end well for stock buyers, despite the fact that Qualcomm had a decade of growth ahead of it and a rock-solid business in the fast-growing wireless game.

Brian White was covering Apple for Ticonderoga, a brokerage that went under a few weeks back.  Before the end of his firm, White’s price target on Apple was $666 (gimmicky? check!)  He’s just joined a new firm, called Topeka Capital Markets and has decided to make a splashy entrance – his new Apple target, just a few weeks later, has magically become $1001 (get it, like Arabian Nights!).  Now that’s how you get attention, every media outlet picked it up (which normally doesn’t happen for Topeka Capital Markets, I’m assuming).

This morning Gene Munster at Piper Jaffrey went for the gold.  To recap, Munster has been bullish on Apple the whole way up, recommending a buy on every catalyst and every dip.  he’s been right and people who’ve listened to him have made a lot of money.  Today’s latest pronouncement from the analyst is (via Notable Calls):

Munster believes shares of AAPL will reach $1,000 in CY14, which would imply a roughly 1 trillion dollar market cap, the first in history. While some investors believe the biggest issue for AAPL to get to $1,000 is the market cap along with excessive investor exuberance, which Munster addresses in this note, he believes the real story is earnings growth. Fundamentally, he believes shares can reach $1,000 based on his belief Apple will continue to win in global mobile devices. As a result, Munster remains confident in his $80.18 CY15 estimate. A 12x multiple (stock’s current out year EPS multiple) on his CY15 EPS of $80.18 yields $960; however, this excludes an Apple Television, which the analyst believes could add more than $4 in EPS (5%) by CY15, which would yield over a $1,000 share price (12 * ~$84).

Now this is a perfectly reasonable thesis, of course, driven as it is by valuation, earnings expansion and the conquest of new markets.  I should add that I’m long so I certainly hope he’s right.  Munster is aware of the fear that Apple is over-owned and over-loved, but says the near-universally rosy sentiment has not yet translated into an obscene multiple. Okay, that’s fair.

But $1000 targets, “trillion dollar calls” and the like just smack of gimmickery.  Maybe I’m too cynical and have seen too many goldilocks stocks get kneecapped just when the buy-recs-for-attention thing begins to roll.

Sources:

Apple: Topeka Starts at Buy, $1,001 Price Target (Tech Trader Daily)

Apple (NASDAQ:AAPL): Why We Believe Apple Will Be The World’s First Trillion Dollar Company – Piper Jaffray  (Notable Calls)

 

 

Tags: ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. คอนโดเงินเหลือ commented on Sep 18

    … [Trackback]

    […] Here you will find 91295 more Information on that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  2. Biography Writing Service commented on Sep 20

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  3. immediate edge review commented on Sep 25

    … [Trackback]

    […] Here you can find 78110 more Info to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  4. 메이저놀이터 commented on Sep 26

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  5. como ganar dinero en automatico commented on Sep 29

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  6. http://informalcommons.org/ commented on Oct 24

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  7. Quality Engineering solutions commented on Nov 11

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  8. devops commented on Dec 09

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  9. wig commented on Dec 16

    … [Trackback]

    […] There you can find 89419 additional Information to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  10. 토렌트사이트 추천 commented on Dec 19

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  11. CI CD Solutions commented on Jan 15

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]

  12. cheap wigs commented on Jan 17

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2012/04/03/apple-and-the-return-of-the-gimmicky-price-targets/ […]