Verizon iPhone Pushes Analysts to Boost Apple Price Targets

Includes: AAPL, VZ
by: Alacra Pulse Check Blog
By Sheena Lee

Analysts are flocking to raise Apple’s (NASDAQ:AAPL) target price following the long anticipated announcement that Verizon (NYSE:VZ) is finally going to sell the iPhone. New capabilities on the device, such as FaceTime video conferencing, may also attract additional customers this year.

At least 20 sell-side analysts have changed or reiterated their targets since the announcement. The mean 12-month target of these 20 analysts is $397.95, up from $384.85 prior to the announcement and from $376.53 in our last full Prognosis in early December.

Targets range from $340 (Rodman & Renshaw’s Ashok Kumar) to $450 (Peter Misek at Jefferies and Brian White at Ticonderoga). Ten analysts raised their targets and 10 reiterated theirs. All 20 analysts have positive ratings on the company. Apple closed Wednesday at $344.42.

“We see this as the single biggest lever Apple has to pull in calendar 2011,” said Piper Jaffray analyst Gene Munster, who increased his iPhone unit estimates by 2.5 million because of the Verizon deal. Munster has a Buy rating and $438 price target on Apple.

Goldman Sachs analyst Bill Shope, who has a $430 price target on the tech giant, reiterated his Conviction Buy rating on shares of Apple as the company announced the long-awaited CDMA iPhone for Verizon.

Barclays Capital analyst Ben Reitzes raised his price target on Apple to $420 from $390, and reiterated an Overweight rating on the stock. Reitzes noted the FaceTime video conferencing capability will have network effects that should enhance sales of iOS devices and Macs.

“We believe iPhone on VZ will be the first true test for (Google’s Android operating system) whether its share gains are real or just a temporary phenomenon due to weak competition…we believe the more interesting question is how many Android users on VZ decide to switch over to iPhone, now given a choice,” said Shaw Wu, analyst at Kaufman Brothers, who has a $395 price target and Buy rating on Apple.

Jefferies & Co. analyst Peter Misek upped his price target on Apple shares to $450 from $365, and repeated a Buy recommendation on the firm’s stock. Misek said he thinks the company will be the prime beneficiary of the two biggest trends in computing, 4G wireless services and tablet computers.

JP Morgan analyst Mark Moskowitz suggested that the Verizon iPhone could boost Apple’s EPS by at least $1.25 per annum. “For Apple, we believe that this new carrier relationship will be a major catalyst for U.S.-related iPhone sales over the next 18-24 months…Verizon’s wireless network offers a higher quality user experience compared to AT&T’s. We expect that this dynamic will drive a significant numbers of subscribers to switch to Verizon…” Moskowitz has a $420 target on Apple shares.

Maynard Um of UBS kept a Buy rating on Apple and a $365 price target. He thinks it “makes sense” for Apple to go after other CDMA carriers, including Japan’s KDDI (9433) and China’s China Unicom (762). Um notes that for every additional 100,000 iPhone units this year add 2 cents to Apple’s earnings per share.

Oppenheimer’s Yair Reiner, who has a $395 target, notes that Apple does not seem to have made any concessions to Verizon: “The iPhone’s subsidy—the fuel of Apple’s earning power—appears as secure as ever.”

Among independent analysts, Clyde Montevirgen, analyst at Standard & Poor’s raised his target price to $420 from $375 and sees incremental unit sales of 7 million through Verizon in this calendar year, to total 65 million for the year.

(Source: Alacra Pulse, All Things Digital, Wall Street Journal, Tech Trader Daily, StreetInsider, Barrons.)

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