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Apple Inc. Message Board

  • michalisrael157 michalisrael157 Jan 23, 2013 10:14 AM Flag

    BREAKING Morgan Stanley out with their update upside is 980$ base case 714$ and worst case 495$

    Share Price

    The Upside Case – $980 (14x CY13e EPS $70)
    Apple Inc. (NASDAQ:AAPL) maintains the upper hand by lowering iPhone and iPad prices, and by selling more units. This bull case scenario can become a reality if they do really well in China by lucratively synergizing with Chinese carrier services. Apple’s revenue is forecasted to grow by 37% for 2013; courtesy 210 million iPhone and 120 million iPad sales. The revenue generated by this mix of iPhones and iPads would result in a gross margin of 44.4%. The P/E multiple of 14x has been adjusted for Apple’s $121 billion cash and is in line with the average P/E of peers like; QCOM, SAP, ORCL and IBM.
    The Base Case – Price Target of $714 (14x CY13e, EPS $51 / 10x P/E)
    This will ensue if Apple Inc. (NASDAQ:AAPL) maintains its market share of phones and tablets, but its China deal doesn’t hit a home run, plus its TV project doesn’t live up to expectations. This base case materializes when 175 million iPhones and 88 million iPad sales result in a revenue growth of 20% in 2013 (which is still better than 2012’s performance of 138M and 63M). If iPads and iPhone sales remain stable, the improved margin can reach 41% (much better than 37% from previous year). The base case P/E multiple is the same as for the Bull case; 14x, after $121 billion outstanding cash balance adjustment.

    The Downside Case – $495 (11x CY13e, EPS of $45)
    The condition that can push Apple Inc. (NASDAQ:AAPL) this way is if Windows 8 does exceptionally well and Apple starts losing its market share. Consequentially, Apple will have to sell its products at lower margin in emerging markets. Small growth in revenue and deceleration in growth margin will limit EPS growth; competition and growth concerns will put tremendous pressure on P/E multiple.

    Eat that shorts

    Sentiment: Strong Buy

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