I'm not saying that the stock is not going to $200. But let's slow down for a moment and take a quick look at the numbers. I'm using Georges Yared's estimates for Apple that go through FY 2009. According to his estimates, Apple's EPS will increase 20% from FY 2007 to FY 2008, and EPS will increase by 25% from 2008 to 2009 (using the high end of his range). Even at the current price of $137, Apple will have a PE of 23 at the end of FY 2009. A PE of 23 is not a bad number, especially if Apple can keep growing earnings respectfully, say 12% to 15% per year. But if, as predicted, Apple's stock goes to $200, the PE becomes 34. That's rather rich for a company that will have a market cap at that time of $173 billion.
For Apple to command that kind of PE, they will have to keep selling a lot of iStuff. Keep in mind, too, that Apple is primarily a consumer electronics company, meaning they are at the whims of changing consumer tastes.
If you've never read or heard of Ben Graham's parable about Mr. Market, I highly encourage you to take a minute and read it, or re-read it. Mr. Market's enthusiasm for Apple's stock seems to be growing daily, and as his enthusiasm increases, he's losing site of the fundamentals of the company, itself. Remember, all businesses have cycles, and when sales slow -- even a tad -- at Apple, the stock will be punished if traders and investors keep the notion that Apple can do no wrong. It's interesting to note -- and a reminder of how the fortunes of companies can and do swing back and forth -- Michael Dell's 1997 comments about Apple. When asked what he would do to fix Apple at that time, he said, "I would shut it down, and give the money back to the shareholders."
Apple is a great company, and Steve Jobs has done a tremendous job of turning around the company after his return as CEO. But as Warren Buffett says, even good companies make bad investments if purchased at the wrong time.
AAPL 1-yr chart
Disclosure: I have no positions in Apple.