Apple may have disappointed analysts back in October when its quarterly earnings came in below expectations, but Wall Street has more than forgiven the tech giant. After being bruised for a bit by that earnings report – shares slid 14 percent from $422 on October 18 to $364 on November 25 – Apple stock (AAPL) has more than recovered, reaching an all-time intraday high above $427 on Monday. It closed Tuesday at $423, still above it's October high.
It wasn’t all that long ago that analysts and Apple’s devoted followers wondered how the company would fare without CEO Steve Jobs – a question that still remains unanswered. But, even as reports come out about new CEO Tim Cook’s $900,000 salary for 2011 – and the restricted-stock grant that could bring him hundreds of millions of dollars if he stays at Apple long-term – it’s clear that analysts still adore Cook & Co.
As Wall Street waits for Apple’s next quarterly update, due on Jan. 24, analysts have been busy raising their earnings estimates and their price targets for the stock. Over the last three months, the average estimates for Apple’s earnings per share have jumped by nearly 13 percent, according to Birinyi Associates.
The loftier expectations are being fueled by “blow-out iPhone sales” and mounting anticipation of new product releases to be announced at a New York event and at San Francisco’s iWorld trade show later this month, possibly including the iPad 3 expected by March or April.
While some analysts worry that iPad sales could be undercut by less expensive products like Amazon’s Kindle Fire, but others are upping their forecasts based at least in part on price cuts for the iPad 2 once the new version is released. (Also on the horizon: Apple’s rumored foray into television sets with a product that’s being called iTV.)
On Monday, analysts at Goldman Sachs, Needham and Hudson Square Research all upped their forecasts. Goldman Sachs analyst Bill Shope reiterated his “conviction buy” rating on Apple while lifting his sales projections and boosting his earnings forecast from $9.44 a share to $9.87. Shope also upped his price target for Apple stock from $520 to $550. “We believe Apple is set to report healthy December quarter upside and all signs point to better than expected performance through 2012,” wrote Shope, who projects that Apple sold 31 million iPhones in the last three months of 2011.
Needham analyst Charles Wolf set his sights even higher, raising his quarterly earnings estimate from $9.55 to $10.85 a share and his full-year estimate from $34.50 to $38.70, while keeping his buy rating and a price target of $540. Wolf puts the number of iPhones sold in the quarter at 32 million.
The gushing is summed up nicely in another new report from Argus Research analyst Jim Kelleher, whose price target for Apple stock is only slightly less lofty at $460. Kelleher writes: “We believe that additional outperformance is ahead in the post-Jobs era, as the company rolls out its unstoppable quartet of products (and iTV too) across the globe.”