Apple Is Honing In On $450

| About: Apple Inc. (AAPL)

Apple's (NASDAQ:AAPL) post-earnings pop up in price could hit somewhere between $450 and $500. Recent analyst upgrades are targeting 550 for 12 months. The high analyst target is $700, and our metrics see this target as possible. Just look at the fundamental and technical comparisons below.


Symbol P/E PEG Growth FPE Target Return Valuation
AAPL 17 0.8 20 13 700 67% 2.1
GOOG 20 1.0 19 14 800 38% 2.1

Based on a total implied return, AAPL would needs to go up to $507 to drop to the same implied 12 month return as Google (NASDAQ:GOOG), at 38%. It's highly unlikely that AAPL is going to reach $507 after earnings. GOOG's price jumped 6% after its gangbusters earnings announcement; a similar jump in AAPL would take it to $445. Therefore it seems that AAPL could easily do better than a 6% increase as a result of earnings. It looks like there's plenty of room to the upside between $445 and $507.

The only thing holding AAPL back is the future without Steve Jobs, and most of that is prices in already. Now the market is ready to listen to and react to the future outlook by CEO Cook. The new iPhone 4S is off with a bang, and iPhone 5 is still in the future, which means the market has something very positive to look for in the future. And the iPad continues to beat all competition. Everyone is chasing AAPL, and nobody is catching up.

Our valuation grid gives the same 2.1 score for both. The 2 indicates they are fairly valued by the market. We expect this to improve to undervalued as analysts raise targets, or 1.1. The point 1 part of 2.1 indicates that forecast earnings are in the top third of all stocks reporting analyst forecasts. But, more accurately, the metrics show AAPL is in the top 10%.


Symbol 50tr 200tr 50pr 200pr RS500 Flow Tmodel Score B/s
AAPL up up 385 358 up +strong 1decile 3 buy
GOOG dn dn 535 560 up +weak 1decile 3 buy

As you can see, AAPL is in a strong uptrend, and at $420 is well above the 50-day and 200-day moving average prices. GOOG, on the other hand, is trying to turn downtrends around, and its price at $582 is currently above the 200-day downtrend at $560. Both are strongly outperforming the S&P 500 index, as indicated by "up" in the relative strength trend. Our proprietary Flow of Capital signal is strongly positive for AAPL, but only weakly positive for GOOG. Both are technical buys, Scoring 3 out of 13. Our technical model shows them both in the top 10% of 8,000 stocks being a sell.

Fundamentals show significant upside potential for AAPL after earnings. Likewise, technicals are strong for AAPL. If the latest analyst high target is right, as our fundamental metrics confirm, there is room for a greater than 6% move up after earnings. APPL continues to be a "growth at a reasonable price" buy, targeting $450 short-term, thus yielding 22% on the conservative $550, 12 month target. We expect targets to be raised after earnings, especially with one analyst at $700. Yield will be closer to 38% with a higher price and higher targets for AAPL after earnings.

Disclosure: I am long SDS.