Apple Price Target: $950 Per Share

Today I am updating my 12-month Apple price target to $950 per share. This price target represents an expected share price appreciation of 52.8% from Apple's closing price of $621.70 on August 10th, 2012. I expect share price appreciation, on average, to trail behind the rate of earnings per share growth over the next 12 months as Apple's massive market cap influences the share price performance and as the company's price-earnings multiple continues to contract.

Over the next twelve months I anticipate reported revenue growth of roughly 50%, corresponding earnings per share growth of about 60% and the aforementioned 52.8% rise in the share price value. I anticipate 12 months from today a price-earnings multiple of 14 times trailing 12-month earnings, suggesting a slight compression in the multiple from today's valuation of 14.61 times trailing 12-month earnings of $42.55 per share. For the four fiscal quarters ending June 29, 2013, I expect trailing 12-month earnings of about $68 per share. 

Apple's P/E Multiple and Cash Per Share

The graph below illustrates Apple's rising cash per share and falling price-earnings multiple over a 10-fiscal quarter period. The dates selected for all of the graphs in today's article are the first trading day of the month following the release of the company's quarterly results. The dates were selected to provide a uniform reference and to eliminate the impact of rising earnings multiples immediately preceding the release of quarterly results. 

No matter the rising cash per share, Apple's price-earnings multiple has been on a steady and indisputable decline over this 10-quarter period. I expect this trend to continue over the next 12 months. 

Apple will continue to trade at a modest multiple to earnings relative to the company's rates of revenue and earnings growth. All of the wishful thinking in the world and spirited comparisons of Apple's valuation to other large enterprises with more lofty earnings multiples will not change the outcome. 

As of Friday's closing price, Apple's market cap stands at nearly $583 billion. I expect over the next twelve months for the market cap to reach $900 billion. Already Apple's market cap is greater than the combined market caps of IBM, Microsoft, HPQ and Dell with about $40 billion in market cap to spare. Apple is among the most widely held equities on the planet and the company's massive market cap will influence the share price valuation no matter the modest price-earnings multiple relative to current rates of growth.

Apple Price Target: $790 Per Share

Today, I am publishing an updated price target for Apple of $790 per share. This target forecasts a 60% gain in the share price from the closing price of $493.42 on Friday, February 10, 2012. I consider this price target to be moderate based on the expectations of strong revenue and earnings growth over the next 12 months and the low valuation range in which the shares currently trade, despite the recent run-up in price. 

Over the past 10 trading days, the shares have risen about 10% from the closing price of $447.28 on January 27th to Friday's closing price of $493.42. However, this recent gain is a market response to Apple's strong December quarter outcome and does not represent a new valuation range for the shares. The shares continue to trade at a significant discount to near-term growth. 

Apple's Current Valuation

The graph below illustrates, despite the near 100% growth in earnings per share over the most recent four fiscal quarters, at Friday's closing price the shares have risen only 43% in value since February 1, 2011. 

Over the past 12 months the company's cash and marketable securities per share has continued to rise as a percentage of the share price. At Friday's closing price, cash and marketable securities per share represented 21% of the share price.  

Apple's Monster Quarter And The Pending Share Price Advance

Apple is unique among America's mega caps due to the company's ongoing rates of revenue and earnings growth. From $108.25 billion in revenue reported in the fiscal year ended in September, Apple will surpass $170 billion in revenue this fiscal year and reach over one-quarter trillion dollars in revenue in FY2013. At a current market cap of $375 billion, the shares trade at about 14.5 times trailing twelve month earnings of $27.68 per share and at about 8.75 times my projected FY2012 earnings of $46 per share.

Because of the company's frenetic rates of revenue and earnings growth, Apple is in an equity class all its own. Apple will deliver a third consecutive fiscal year of revenue growth above 50% and eps growth above 60%. This fiscal year's strong performance begins with what I call "Apple's monster quarter."

Apple's Monster Quarter

Apple's first fiscal quarter of FY2012 will be fourteen weeks in length. It stretches from September 25, 2011 to December 31, 2011. The additional week in the quarter will encompass the immediate post-Christmas period. The quarter also includes the initial release of the iPhone 4S in the United States and other launch countries. The additional shipping week, the new Sprint agreement for the iPhone and pent-up demand for the recently refreshed smartphone handset will deliver revenue growth greater that 60% in the quarter and eps growth exceeding 80%. 

AAPL's Discount To Current And Future Growth
The chart below illustrates how much the rate of Apple's share price appreciation has fallen behind the rate of earnings growth over the past four quarters. Despite the 82.7% growth in earnings per share in FY2011, at Apple's closing price of $403.33 on Friday, December 23rd, the share price has risen only 24.64% year-over-year. The dates selected for the charts in this article represent the first trading day of the month following the release of quarterly earnings and the closing price on Friday, December 23, 2011.

Apple Price Target: $640 Per Share

Today I am posting my 12-month price target for Apple of $640 per share. This target price forecasts a 63% advance in the share price within twelve months and tracks slightly below my anticipated 66% growth in earnings per share in Apple's current fiscal year. 

Apple's Share Price Today

Apple closed trading on Friday, October 21st, at $392.87. At that price the shares traded at 14.19 times trailing 12-month earnings of $27.68 per share. The lowly price-earnings multiple stands in stark contrast to the company's 66% revenue growth in the fiscal year ended last month and the corresponding 82.7% growth in earnings per share. At the end of the fiscal year, Apple had cash and marketable securities of $81.57 billion or almost $87 in cash standing behind each outstanding share. The company's cash per share provides a strong foundation for share price appreciation at a rate in tandem with the anticipated rate of growth in earnings per share.

Apple's languid September quarter revenue growth of 39% and eps growth of 52% reversed the recent upward momentum in the share price.  While the quarter's outcome was indicative of Apple's revenue growth challenges in fiscal quarters immediately preceding the annual iPhone product refresh, it was not indicative of anticipated average rates of revenue and earnings growth in the four fiscal quarters immediately ahead.

The Cyclical Nature of Apple's Revenue and Earnings Growth

Each of Apple's four fiscal quarters have strong seasonal or product cycle influences on their respective revenue and earnings growth outcomes. For example, the current fiscal quarter (FQ1 2012) includes a fourteenth shipping week that occurs once every six years and encompasses the immediate post-Christmas shopping week. The quarter will also realize above average rates of revenue and earnings growth due to the release of the iPhone 4S early in the quarter. While FQ4 2011 was negatively impacted by the pending iPhone model refresh, the current quarter will benefit from the release of the new iPhone handset. 

Apple 12-Month Price Target

There were a number of challenges revealed in Apple's September quarter results I will address later in this column. Those challenges are amplified by a slow-growth global economy and increasing competition in the smartphone device market. Based on Apple's FY 2011 performance, anticipated global growth in iPad sales and the successful launch of the iPhone 4S, I've established a 12-month price target of $640 per share. 

This 12-month price target of $640 anticipates FY 2012 revenue growth of 55% and eps growth of 66%. It also anticipates a price-earnings multiple of no more than 14 times forecast FY 2012 earnings of $46 per share. 

Apple's Share Price Performance

The chart and table data below illustrate and detail Apple's share price performance over the most recent twenty months. It includes the share price as of Friday, October 21, 2011 and the closing share price on the first trading day of the month following the release of earnings dating back to February 1, 2010.

The AFB AAPL Price Target Index - June 2011 Edition

The Apple Finance Board is home to some of the best known and hardest working independent AAPL analysts on the blogosphere. As a service to the members of the AFB, a popular and well respected discussion board, I'm hosting the index of AFB AAPL price targets and share price forecasts developed by the members. 

Index participants submitted AAPL price targets for the first trading day of the month following the release of Apple's quarterly earnings reports through May 1, 2012 and associated ranges for the share price. The dates chosen for the quarterly price targets represent the first trading day of the month following the release of Apple's quarterly earnings reports, providing time for the markets to adjust the company's valuation based on the the most recent quarterly numbers. 

Comments on the index can be made at the bottom of this post and for registered members of the AFB in the topic created specifically for this discussion.  

The graphs and data table below indicate the average AAPL price targets of the index participants. The price targets and price range forecasts of each of the participants is listed below the averages. Thank  you to the AFB members participating in the index for the benefit of our readers.

	AFB	Index	Averages
	Date	Low	High	Target
	Aug 1, 2011	352	418	397
	Nov 1, 2011	394	470	445
	Feb 1, 2012	438	518	498
	May 1, 2012	478	558	547

The AFB AAPL Price Target Index - February 2011 Edition

The AFB AAPL Price Target Index - February 2011 Edition

The Apple Finance Board is home to some of the best known and hardest working independent AAPL analysts on the planet. As a service to the members of the AFB, a popular and well respected discussion board, I'm hosting the index of AFB AAPL price targets and share price forecasts developed by the members here at Posts At Eventide.

This post is an update to the initial AFB AAPL Price Target Index published in January. The participants in this index represent a cross section of AFB members ranging from well known AAPL analysts Horace Dediu, Daniel Tello, Turley Muller and Andy M. Zaky, to long-time AFB members Mark Beauch and Ron Smith and newer members such as Dennis Hildebrand. In all, twenty four (24) members of the Apple Finance Board are represented in the index.

AFB AAPL Price Target Index Averages

Index participants submitted AAPL price targets for the first day of the month following the release of Apple's quarterly earnings reports through February 1, 2012 and submitted associated ranges for the share price. Comments on the index can be made at the bottom of this post and for registered members of the AFB in the topic created specifically for this discussion.  Thank you to the index participants for submitting their share price targets and anticipated trading ranges. 

The graph and data table below indicate the average AAPL price targets of the two dozen index participants. 

AAPL 12-Month Price Targets

AAPL 12-Month Price Targets

On February 1st I posted a five-quarter review of Apple's price-earnings multiples with and without the company's burgeoning cash balances factored into the share price valuations. Over a one-year period ended on February 1st, Apple's share price rose 77% against a 75% rise in reported earnings per share.

Looking forward 12 months to February 1, 2012, I anticipate about a 70% rise in Apple's share price to $590. This is based on an expectation of a continuing rise in quarterly earnings per share at a pace close to the 75% realized in the December quarter for the balance of FY2011 with strong eps growth continuing through FY2012. 

The dates chosen for the quarterly price targets represent the first trading day of the month following the release of Apple's quarterly earnings reports, providing time for the markets to adjust the company's valuation based on the the most recent quarterly numbers. 

The graph below illustrates the growth in Apple's share price over the past four quarters and my quarterly target prices for the next 12 months. The table data provides a delineation of the share price changes over the past four quarters and the share price changes projected in my estimates. 

				Quarterly
	Date	Price	Target Price	Price Change
	2/1/10	194.73
	5/3/10	266.35		36.78%
	8/2/10	261.85		-1.69%
	11/1/10	304.18		16.17%
	2/1/11	345.03		13.43%
	5/2/11		405	17.38%	Projected
	8/1/11		454	12.10%	Projected
	11/1/11		519	14.32%	Projected
	2/1/12		590	13.68%	Projected

Apple's Price-Earnings Multiples Before and After Earnings Reports

Apple's Price-Earnings Multiples: Before and After Earnings Reports

On November 14, 2010 I published my most recent AAPL price forecasts and price targets. In that post I set a share price target of $363 for February 1, 2011 with a forecast price range of $346 to $380. On Friday, January 14, 2011, AAPL closed at $348.48 per share, in anticipation of strong December quarter results to be released on Tuesday. 

At Friday's closing price AAPL is trading at 23 times trailing 12-month earnings. This multiple foreshadows a strong December quarter performance and the market's response to this week's announcement the iPhone will soon be available in the US on the Verizon network.

In preparing for revisions to my price forecasts and targets to be published soon after the release of the December quarter results next week, I researched the price-earnings multiples for AAPL just prior to and soon after the public release of quarterly earnings reports for the most recent quarterly periods. The data suggests no matter the recent rise in Apple's share price over the past few weeks, there's room for the share price to run following the release of December quarter results on Tuesday. 

AAPL's Pre-Earnings P/E Multiples

The table data and graph below indicate the closing share price and price-earnings multiple on the 15th of the month and within a week of the release of quarterly earnings reports for the most recent four fiscal quarters. Apple's Friday price-earnings multiple of 23 times trailing earnings is within the range of recent multiples ahead of earnings releases.

Apple's Pre-Earnings Multiples

	Date	Price	P/E Multiple
	Apr 15, 2010	248.92	24.31
	Jul 15, 2010	251.45	21.35
	Oct 15, 2010	314.74	23.70
	Jan 14, 2011	348.48	23.00

The AFB AAPL Price Target Index

Please see The AFB AAPL Price Target Index - February 2011 Edition posted February 15, 2011 


The AFB AAPL Price Target Index

The active members of the Apple Finance Board are best described as an assemblage of talented individuals with colorful personalities. They are outspoken, hardworking and focused on understanding everything there is to know about Apple and the company's financial performance.

As a service to the members of the AFB, a popular and well respected discussion board, I'm hosting the the AAPL price targets and share price forecasts developed by the members here at Posts At Eventide. As the host of the index and commentator on the members and their entires, I'll be publishing my price targets and forecasts in separate posts at Eventide. 

This index is the second in a series of polls soliciting the input of AFB members. The AFB AAPL FQ1 Estimate Index was published on January 1, 2011. 

The participants in this index represent a cross section of AFB members ranging from well known AAPL analysts Horace Dediu under his asymco moniker and Daniel Tello, commonly known as deagol, to long-time members macorange and ChasMac77, and members who have joined the discussion group within the past year such as Gregg Thurman. 


AFB members tend to be bullish and their expectations for near-term appreciation in Apple's share price is evidenced in the numbers. AAPL closed today at $341.64, following the iPhone on the Verizon network announcement and ahead of next Tuesday's release of the company's results for the December quarter. The average share price target for May 1, 2011 of $385 per share evidences expectations of a more than 12.5% rise in the share price between now and the first day of the month following the release of the March quarter results. The average target price for just over a year from now calls for a nearly 57% share price advance from today's closing price.


Comments on the index can be made at the bottom of this post and for registered members of the AFB in the topic created specifically for this discussion.  

Below are the average price targets and share price ranges for the 13 AFB members participating in the index by providing projections for the selected dates:

	AFB	Index	Averages
	Date	Low	High	Target
	May 1, 2011	345	411	385
	Aug 1, 2011	377	455	425
	Nov 1, 2011	425	510	475
	Feb 1, 2012	476	581	536