Nice job on WON chart!
--------------------------------------------------------------
JP Morgan upgraded AAPL:
<Added Apple to Americas Conviction Buy List
September 8, 2006
Source of opportunity
We added Apple to the Americas Conviction Buy List. We see upside opportunities on top of our now-above-consensus earnings estimates from each part of Apples three-pronged strategy Mac, iPod, and new consumer electronics areas with the most underappreciated of these coming on the Mac side where more aggressive pricing on Apples Intel-based offerings would accelerate an upgrade cycle within its installed base and attract new users at a faster pace. Our new price target of $85 suggests 17% potential upside from last nights close, with upward earnings revisions and positive news flow potentially moving the shares to that level well before our 12-month timeframe.
Catalyst
Apples special event next Tuesday is just the start of a steady stream of consumer electronics announcements over the next 6-9 months. In conjunction with stronger Mac sales, new iPods and yet-to-be-announced consumer electronics products such as the iPhone should drive top- and bottom-line upside, potentially moving Apple shares to our $85 target price.
Valuation
As one of our growth company stocks, our 12-month target price for Apple shares is based on a combination of our fundamental framework and our quantitative valuation which is comprised of target P/Es, growth-adjusted earnings multiples, cash flow metrics and DCF. Our new EPS forecast of $2.26 and $2.78 for calendar 2006 and 2007, respectively (compared to $2.21 and $2.60 previously), higher expected growth, and the corresponding positive impact on cash flow yield underpin our $85 price target versus our prior price target of $77.
Key risks
Apple is the ultimate product cycle company and the biggest risk to our thesis lies in the extent to which Apple can continue to turn out new offerings and the level of consumer acceptance. In addition, Apples ongoing options backdating investigation poses corporate governance risk.> |
