Barclays raises its Apple target 26%
Anticipating a new family of iPhones in June and a new ultraportable later in the year, Barclays Capital's Ben Reitzes has raised his price target for Apple (AAPL) shares to $143 from $113 — a 26% increase — and upped his earnings estimates across the board.
Reitzes has also changed the way he calculates Apple's price targets, which, if it catches on, could make a significant difference in the Street's view of the company.
With Apple scheduled to release its fiscal second-quarter earnings report on April 22, many high-tech analysts will be taking a fresh look at the company over the next two weeks, and Reitzes is one of the first out of the block.
The main change in Reitzes' near-term numbers is a new, more bullish view of iPhone sales. Based on research that suggests they held up better this quarter than he thought they would, he's upped his estimate of Q2 unit shipments to 2.8 million (from 2.2 million). He's also upped his Q3 estimate to 4.3 million units (from 2.1 million) anticipating the release of new iPhones in June.
For this year and next, he's expecting …
- 2009 iPhone sales of 17.4 million units (was 13.3 million)
- 2010 iPhone sales of 22 million units (was 19 million)
Reitzes' description of the new iPhones is in line with what the rumor sites have been reporting, including an upgraded camera, new software, better email and security. He's particularly excited about the possibility of a second camera in the front of the phone (for video chatting) and video recording features that could rival Pure Digital’s popular “Flip” product line. He also expects an iPhone deal for mainland China — probably with China Unicom — no later than June.
Reitzes has less to say about the ultraportable he thinks Apple will release in the second half of 2009, except that he believes the company will address the growing netbook market "in its own differentiated way" — perhaps with a tablet-like computer/iPod optimized for media, gaming and special functions like mobile iChat.
But perhaps the most significant thing about Reitzes' report is the new way he is calculating Apple's future earnings.
Most analysts are still using GAAP (generally accepted accounting principles) formulas that ignore the money flooding into Apple's coffers from iPhone subscription accounting. (See Apple's growing cash hoard.)
But that share of Apple's earnings, as Steve Jobs put it last year, is getting too big to ignore. So from now on, Reitzes will be calculating his price targets based on so-called non-GAAP numbers that include this revenue stream. He's reached his new $143-per-share target by applying a 15X multiple to a "pro forma" non-GAAP estimated EPS of $7.88 for fiscal 2010.
It will be interesting to see over the next two weeks if other Apple analysts follow his lead.
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Guys, get a grip on some reality. This is like when the analysts were saying the US economy doesn't matter any more the rest of the world would carry us through…now these analyst are saying the iPhone's "hidden revenue stream" will carry Apple through these rough times??? The iPhone only accounts for less than 7 percent of Apples revenue! People need to be buying Apple's expensive Macs in order to keep revenues up. Take this opportunity to take your money and run, and buy the stock again another day.
The foreign language virtual keyboards work great ! no wonder Apple doesn't need the clunky QWERTY. I am thinking of hooking up my iMac using Bluetooth, or any screen using Bluetooth if I want.
I gave my 1st generation Iphone to my sister in love, who is Korean and live in Seoul and she was very happy.
She said that also in Korea they like the iphone a lot.
Some places in Seoul, last year, were selling cracked iphones for 3 grands and one gadget shop in Korea Town in NY sold cracked iphones to work for the Korean system at 1400$.
It is true that Korea is a Windows country, but as many other places in the world, the publishing, advertising, media and entertainment industries are mostly Mac based.
You don't download the keyboards, they're built-in. You select them in Preferences. I've selected the Chinese keyboard, which is mostly the same as the Japanese one, since the Japanese use Chinese characters as their Kanji.
There's a recent article, last week, in some Korean-English news site, that stated the Koreans were excited about getting the iPhone more than getting Blackberries, due to its superior character input system. You may have to google for it.
In Japan, the iPhone is probably doing just about as well as to be expected. There have been reports that the iPhone is a failure there, but those reports have been rebutted by some of the interviewees from Japan.
The problem in Japan and Korea are that they are unique markets. The Japanese are used to their emoji and trinket straps and 1-sec payment systems, as well as tv on the go. The Koreans have their own requirements that make it difficult for any foreign mfrs to compete effectively.
Could it be English being the barrier selling in Korea or Japan? I noticed iPhone has many language layout keyboards but when I tried to download and use them it often wouldn't work. If these Korean or Japanese virtual keyboards work on the iPhone or iPods I think they can really sell a lot in Asia for the texting customers. Apple always make the customers squeal in pleasure with their superior products and this June is gonna be another Apple love-in making Apple bigger than Microsoft, finally? I hope.
So, what Reitzes is admitting to, is that he has not been baking deferred revenues into his earnings model?!? How is that possible? I've published a couple pieces on MacDailyNews' Opinion page pointing out that I suspected as much, but people always tell me that these are professional analysts, and they know how to think about non-GAAP revenues.
PED, remember way back in March of last year, when you published a story, where analyst Shaw Wu, admitted to not quite understanding Apple's deferred revenues?
This is more proof that the pros are clueless.
I dunno about the iPhone in Korea. I visited Seoul about 2 1/2 years ago, and that was the most Mac-hostile place I've been. Computing was all Windows, all-the-time, and there were lots and lots of mobile phone gadgets where gadgetry, not system ease-of-use, seemed to be the primary driver. I don't recall seeing many iPods in Seoul; everyone was too plugged into their cellphone.
I'd like to think that iPhone system-level advantages would play well everywhere, but if I had to predict one place that I've visited where it might not, that place would be Korea. (But there are lots of places I have not visited, including Japan, India and China outside of Hong Kong…)
Apple will be back and stabilize at $200 at the end of this year.
iPhone is a success, OS 3.0 is adding to it + new models coming in june.
Yes, we can expect surprising YOY sales increase this quarter from them.
First of all, because they are very conservative in their estimate.
But one needs to consider also, the incredible demand for Apple products.
A smart thing would be to release an iPhone without web browing and expensive data plan.
This would rock even more overseas (especially India). Lots of people just need a phone.
I think the future of Apple is pretty bright. It's only the beginning.
Not to mention the upcoming tablet or touch screen netbook or larger iPod touch… iBook?
Why is Apple holding on the deferred earnings while RIM is not? How much longer can Apple hold back their real earnings from us? Is Apple afraid of being a runaway stock success too early and too much?
The key point here is an analyst using the non-GAAP number. THIS IS HUGE. If the street truly understood the deferred iPhone revenue, appl would have been much much higher due to the growth introduced by iPhone 3G. If this finally takes hold, it will be time to put your seat belts on!
Given the results of recent success of RIM I should not be surprised to see Apple's success to be much higher than the forecast here. The interest in quality smartphone in Asia, namely the Apple products is very high especially in Korea.
In the tiny island of Hongkong alone $900 million of businesses took place on the Easter 2009 holiday. Smart money buy smartphone. Estimated 97% of the world's money is sitting at the sidelines. Over a trillion Citigroup shares a day were bought @ $.97 and these very smart buyers have made 400% gain. The world is always a complex place, that's why smart people need smartphones which can truly help them with smart applications. Apple iPhone is the only smartphone only opioniom because iPhone is the only device that 'thinks' using smart application logic and user context when interacting with the phone user. The other phones are dumbphones, like all the Rim blackberries, the phone users have to use the clunky QWERTY keyboard or Storm Touch screen to enter archaic keystrokes and using stone age menu options to tell the blackberry what to do. Smart people use smartphones (iPhone) and dumb people must use dumbphones in old dumb ways. What's new?