Such Great Heights for AAPL - and Such Great Expectations
Mar 16, 2012 5:00 AM PT
For a short time Thursday, the per-share price of Apple's stock vaulted over the US$600 mark, quite a feat for a stock that just hit $500 per share 22 trading days ago.
While Apple's stay above $600 per share has been short-lived so far, it hasn't discourage some analysts from quickly recalculating their expectations for AAPL.
Eagle-eyed Apple watcher Gene Munster of Piper Jaffray changed his prediction for the price of Apple stock for the year to $718 a share from his original forecast of $670 a share.
Morgan Stanley's Katy Huberty, who had low-balled her estimate for Apple at $515, also changed her tune, predicting a year-end stock price of $720 a share. But she didn't stop there. She raised the possibility that Apple's stock could hit $960 a share by year's end.
Fantastic Year in Making
It's no accident that Apple's brief surge past $600 came on the eve of the new iPad arriving in consumers' hands, according to Chris Versace, The PowerTrend Investor.
"After the launch of the new iPad and favorable reviews of that product, Wall Street analysts were ratcheting up their shipment expectations for the year, with the result that they're increasing their expectations as well," he told MacNewsWorld.
The recent price surge also reflects investor optimism about Apple's future.
"2012 is going to be a fantastic year for Apple," Versace predicted. "Not only do we have a new iPad, but later in the year, we're going to have a new iPhone. We're also hearing rumblings about new notebook products, including a 15-inch MacBook Air."
The market may pull back from the stock before the end of the year, but in the next 12 to 18 months, Apple's stock could be resting comfortably above $700 a share, he added.
Jobs' Demise Overblown
Apple's combination of powerful financial numbers and global market potential are two more factors contributing to the rapid advance of the company's stock price, according to Scott Testa, an assistant professor of business at Cabrini College.
With market capital of more than $500 billion, nearly a fifth of it in cash, the company is in excellent financial shape, he explained.
Meanwhile, the company's last earnings quarter significantly beat Wall Street estimates, he told MacNewsWorld, and "people are starting to realize that the Apple brand is really in its infancy when it comes to the global marketplace."
There was also some uncertainty in the market about the future of the company when one of its co-founders passed away, he noted. "There were some reservations that after Steve Jobs died that this growth would subside and if anything, it has accelerated," he said.
"I think his demise was overblown by the investment community," he added.
Performing Up to Par
As successful as Apple has been in recent times, this latest market runup has been exceptional, contended Rocco Pendola, publisher of the Pendola Stock Option Newsletter.
"Over the last couple of months, this has been the first time where Apple's stock has taken off and been sustained, without the dramatic and meaningful pullbacks that we've seen in the past," he told MacNewsWorld.
"While the stock has done well over the past few years, there was some frustration at times that it wasn't going where it should go based on the performance of the company," he continued. "Now that's finally happening."
Just as surely as stock prices go up and stock prices go down, however, Apple's fortunes will have to turn some day, won't they?
"The obvious answer is, do they have this pipeline intact to continue to produce products that people are going to want to buy?" Pendola observed.
"That sounds simplistic, but at the end of the day, I don't know if we should be searching for a more complex answer, " he said.