Thursday, March 17, 2011

Credit Suisse (CS) Spins Apple (AAPL) As Most Valuable Company

Shares of Apple (Nasdaq:AAPL) got crushed on Wednesday, plummeting by 4.5 percent after being downgraded.

That has been somewhat answered by Credit Suisse (NYSE:CS) today, who launched coverage on Apple with an "Outperform" rating and a $500 price target. That is a 52 percent upside from Apple's Wednesday close.

Assuming the price target is accurate, it would make Apple the most valuable company in the world. It makes a nice headline and attracts interest, but that 52 percent upside isn't exactly you can turn on or off as a company.

"In its rating, Credit Suisse analyst Kulbinder Garcha concluded that Apple should be able to deliver outsized revenue and earnings growth of 50% and 46%, respectively, over the next two years. This would be significantly greater than the consensus expectations," said TheStreet.

"Garcha said Apple's iPhone is still the driver. He sees Apple's smartphone share rising to 20 percent in 2012 driving volume of 72 million units in 2011 and 112 million in 2012. This would translate into revenue for Apple of $47 billion and $67 billion, respectively.

"On the iPad, Garcha sees the tablet market rising to $120 billion in 2015. In the segment, Apple will continue to dominate and they see the company maintaining share as high as 50 percent long-term. By 2012, the Apple's iPad could become a $34 billion business. In addition, iPad gross margins could expand to 35 percent by the end of this year, up form 27 percent in 2010.

"Garcha said he still sees room for an extra $10 per share in earnings, driven by a low-end iPhone, a greater push into emerging markets, along with enterprise traction."

Apple was trading at $338.55, gaining $8.54, or 2.59 percent, as of 12:14 PM EDT.





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