| | We believe Apple’s shares will see near-term strength to $80 as the company
benefits from the aforementioned trends in the marketplace. The stock is
relatively expensive at $80, which equates to 29 times our FY06 NOPAT of
$2.20. However, we believe the company is still at a point where estimates will
continue to increase, and accordingly, it will fit the valuation gaps.
The benefits of the iPod and its potential Halo Effect are beginning to bear fruit,
and even though one quarter does not make a trend, we believe Apple’s Mac
mini will also enable the company to address the low-end of the market, which
should enable the company to gain share going forward.
Cash: Apple’s cash and investments increased to $6.4 billion, up almost $1
billion q/q. Cash per share now stands at $15.39.
Raising Estimates and Price Target. We are increasing our
FY05 revenue and EPS estimates to $12.8 billion and $2.05
from $11.9 billion and $1.49, respectively. Our FY06 estimates
go to $15.2 billion and $2.42 from $13.6 billion and $1.83,
respectively. We are also raising our price target to $80 from
$70, which reflects 29 times our FY06 NOPAT estimate of
$2.20 (ex $15/share in net cash).
CSFB |
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