APPLE BUY Target $550 PLUS



BUY Target: US$550.00

Technology — Communications Technology — Wireless Equipment
Investment recommendation:

Consistent with our expectations, Apple announced its new iPhone 5S and iPhone 5C models for the Holiday selling season. While the iPhone 5S/5C specifications and timing were consistent with our expectations, the 5C was priced higher than our
expectations. Given Apple’s aggressive launch plans for both these models to more than 100 countries, including China, by year end, we are raising our Q1F2014 and overall F2014 estimates.

We believe Apple’s industry-leading software ecosystem and leading hardware expertise will lead to a strong multi-year product cycle. We reiterate our BUY rating and increase our price target to $550 PLUS
Investment highlights
We believe the new iPhone 5S has very competitive high-end specifications versus leading Android smartphones including the world’s first 64-bit A7 processor, a separate M7 motion coprocessor and Touch ID – a fingerprint authentication sensor built into the new home button. Further, we believe new capabilities in iOS 7 available September 18 along with the features and new colors for the 5S and 5C should drive strong sales, particularly to Apple’s large iOS base. Consistent with our model,

Apple anticipates surpassing 700M cumulative iOS sales next month.
 The more affordable 5C features a hard-coated polycarbonate body, 4” Retina display, A6 processor, and is available in five colors. Consistent with our expectations for increased LTE support in the new iPhones leading to increased RFIC $-content per iPhone, all the five announced SKU’s for both the iPhone 5S and 5C are LTE enabled (including some SKU’s supporting up to 13 LTE bands).

Given the slightly higher pricing for the 5C and aggressive launch plans, we increased our F2014 iPhone sales estimate from 177M to 180M units and our ASP forecast from $543 to $562, resulting in our F2014 EPS estimate increasing from $44.20 to $46.05.
Valuation: Our $550 price target is based on shares trading at roughly 12x our F2013 EPS estimate. We expect to see Apple surpass that dollar value and it is a major part of the Jack A. Bass Managed Accounts now listed on the public NASDAQ site ( created today without historical pricing at  time of acquisition)

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s