Why Apple is on fire: $217.58 edition

Two weeks ago it was Tim Cook’s bullish guidance, this week the easing of trade tensions with China.

Below: Apple vs. S&P 500.

fireClick to enlarge.

Friday’s close was the fourth all-time high in four days. Below: The top 30 closing prices from AAPLInvestors.net. Dates in green indicate closing price was an all-time high at that time.
fire

My take: There is joy in FUDville.

A straggling few got up to go in deep despair. The rest
clung to that hope which springs eternal in the human breast.

Click here for 1920 rendition.

8 Comments

  1. Fred Stein said:

    1) Crossed $1T cap perceived milestone – not meaningful.
    2) Crossed forward P/E over 16, a milestone – meaning investos no longer see Apple as a “steel mill going out of business” (source Apple3.0.). Seriously, a forward P/E of 16 is a mild signal of investor confidence. It could go higher.
    3) Now trading above average of analysts projections – Analysts will scramble to catch up.

    3
    August 18, 2018
  2. Robert Paul Leitao said:

    Apple remains attractively valued even at Friday’s closing price of $217.58. This fiscal year Apple demonstrated willingness to push innovation at the risk of unit sales and the necessity to increase ASPs. As an outcome the company delivered the performance and features consumers desire and the advanced security demanded by enterprises.

    Several Street analysts have price targets that are underwater because they are using outdated valuation models which focus primarily on hardware sales rather than the value of a global eco-system that is beyond compare. In FY2019 (which begins in six weeks) Apple will realize growth in iPhone units sales at ASPs similar to this year. Combined with fast-paced growth in Services and Other Products revenue, the company will outpace the Street’s expected revenue growth rate of 5.10%.

    Apple’s capital expenditures and R&D spend continue to rise as the company prepares to release new iMacs and portables. The iPad line will also be updated and will incorporate many of the new technologies seen in the iPhone X. The iPhone will have the X’s new technologies integrated deeper into the product line.

    The intent isn’t to drive hardware innovation alone. The intent is to also provide the most advanced and robust environment possible for developers to craft cutting-edge solutions, further distancing the eco-system beyond the reach of any and all potential competitors. Hardware innovation and increased device performance create opportunities for more advanced services solutions.

    Consequently, Services revenue growth will outpace the growth in device sales revenue due to rising ARPU (average revenue per user) over an expanding base of users. As a platform enterprise, Apple remains attractively valued.

    In my view, Apple continues to trade as a “value” stock with conservative Street expectations for near-term revenue, net income and earnings per share growth.

    4
    August 18, 2018
    • Gregg Thurman said:

      As aggressively positive Munster is in his praise of Apple, Brian White is the only one that truly gets Apple/AAPL.

      After December quarter results there will be a rash of analyst replacements, starting with the likes of Sherrie Scribner, Abhey Lamba, Jeffrey Kvaal, Rod Hall, Tim Long, Mark Moskowitz and others. Their current consensus price target for AAPL is $177. That’s 19% underwater, Jesus, AAPL appreciates more than that each year, making their targets about a year out of date.

      There are others, but as a start replacing this group would be great.

      1
      August 18, 2018
  3. Fred Stein said:

    Did the math:

    Brian White’s PT of $275 is 20x forward earnings. That’s a fair valuation. Not high.

    Investor sentiment and other analysts? whole other story.

    0
    August 18, 2018
  4. Ken Cheng said:

    I think Icahn probably deserves a little more credit than he gets which is nil. He had a $216/sh Enterprise Value on Apple back in his letter from May 2015!

    And he showed his math.

    1
    August 18, 2018

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