Braeburn Group 1 year price target

I belong to a group of independent Apple analysts called the Braeburn Group.  Every quarter we publish a new 12 month price target.  This is an average of the analysts that participate.  Here's the link. My personal 1 year target is still 910, which is documented on my last post.

Just for fun, let's review my prediction on May 29th 2012.  I posted the following price targets on that date:

Sept 1 - $46.24 = $624.24 (13.02)
Dec 1 -  $54.69 = $738.31 (15.50)
Mar 1 -  $63.32 = $854.82 (22.50)
Jun 1 -  $69.02 = $931.77 (18.00)

What was the price on May 29th? - $574.00 at the close.  We closed on Sept 1 at $668.60.  I missed by 42 bucks / share, even a mega bull like me was caught off guard with the huge run up in the last few months.

Weird - TTM earnings are at 42.55 - Missed that by $3.69 lower, but the share price is higher. I just didn't expect the PE expansion to be like this..  I hope this is a trend that continues..

Here's some more fun - On September 30th 2010,  with Apple's share price at $283.75, I posted that Apple's share price would hit 400 / share by January 2012.  Closing price on January 3, 2012 - $409 / share.. not bad for an amateur.

I will keep checking in to see how my May 29th targets fare, even though I adjust / update as the year progresses.



   Dennis

My September 1 2013 share price for Apple

Today TTM earnings are at 42.55

Apple will grow earnings 53% to $65.00 TTM earnings at Sept 1, 2013.
Current PE is at 15.23
I’m giving Apple a PE of 14 on Sept 1, 2013.

$65.00 x 14 = $910.00 - That is 40% share price appreciation to go with 54% projected earnings growth.

My share price projection for Sept 1 2013 = $910

This feels somewhat conservative, but it feels right.  What’s amazing to me is the fact that Apple reported a disappointing Q3 quarter in most people’s eyes, but here we are 1 month after reporting and sitting on the all time high, and MAJOR MAJOR catalysts right around the corner.  There have been media reports that Apple will sell 250 million iPhone 5’s, and with the iPad mini coming on board before Christmas….  well, let’s just say The immediate future is bright. 

For Q4 - my rough numbers are:

iPhones = 23.5 million
iPads = 20 million
Macs = 5 million
iPods = 6.5 million
iTunes / software = 3.5 million

Rev = 38.25 b
EPS = 10.56

iPhones - This is based on 2 weeks of iPhone 5 sales to boost what will be viewed positively - based on woeful 4S sales and overall number greatly lifted on what I hope will be documented iPhone launch sales records reported.

My FY13 Q1 projections remain the same:

72 billion rev - 22.50 EPS (57 million iPhones / 33 million iPads)

FY13 Q2 - 18.00 EPS
FY13 Q3 - 14.00 EPS

I’m figuring sequential decline from Q2 - Q3, based on what happened this year, however that could change based on what occurs with iPad mini, iTV, iWallet etc etc. - My numbers above assume none of that.

Thanks for checking in and let me know what you think.

Dennis Hildebrand

A huge miss for Apple, my cronies, and me

Apple's numbers came in yesterday, and if you are reading this, I'm sure you know what they are - My reaction in bits and pieces over the last 27 hours:

My initial reaction is one of shock.  I did not believe that reporting an E.P.S below $10 was possible for Q3 12.

The fallacy in my individual thinking is that I did not (again) factor in anywhere near enough “end of product cycle slowdown”  for the iPhones.  I have to re-evaluate my analysis, and put a much heavier weight on this when it happens again.  And with the guidance of 34b and $7.65, I can absolutely expect a post October launch of the iPhone 5.

The upside to the guidance being that low, is that we (I) can now manage a more realistic set of expectations.  This all points to a Q1 that will be incredible, and it presents an amazing buying opportunity for those of us that believe.

More perspective:  It seems as if Apple is content in being the “tortoise” to Androids “hare” in this race for global market share.  Long run, this will pay off for those of us that are patient, I believe.  With the eco-system in place, and the best products available, they will grow their marketshare slowly.  This might be a good strategy, it’s the quality of the products that will win this race.  I will admit to feeling some frustration over Apple being slow to launch their biggest revenue product in their portfolio.  Again the upside here is the build up of pent up demand, that Apple seems to always do.

On the surface, it appears that Samsung/Android has a leg up, but the “tortoise” approach could prove to be successful when looking long term…. more to come

Wednesday 5:20pm

It’s now been over 24 hrs since the earnings report, and given time to absorb the information, and I have deliberately not been reading blogs, articles, opinions, and reactions so that I can clear my mind of clutter and of others opinions.
I’m going over my models for Q4, Q1, Q2, and Q3, and have radically changed my views to the downside which doesn’t mean that I’ve turned into a bear, it’s more of coming down to earth, and realizing that Apple is going to move at their own pace, instead of everybody else’s pace, or even better, my expected pace.  The bottom line is they are still growing.  The other bottom line is Q1 WILL be a monster quarter. 

Apple’s guidance was so low, that I’m moving my EPS down to $9.00 for Q4 - Yes - the 3rd sequential decline in a row, but 20% YOY increase.  In Q1 I’m staying with 22.50 EPS, but I’m going to model the same percentage sequential declines in EPS in 2013, that we are experiencing now.  I’m expecting a yearly EPS at the end of Q3 of $61 and a PE of 14 with a new price target of $854 / share on Sept 1 2013.

This is far lower than my previous model, and represents my radical shift in my mindset of what was once over exuberant, to now just plain bullish on the company and the stock.

Q3 2012 Estimates



iPhones - 32,000,000
Macs - 4,620,000
iPads - 21,000,000
iPods - 6,500,000

Total Revenue: 42,231,100,000
EPS: 12.82 
Gross Margin: 46.0%




The above are my estimates for the June quarter for Apple... I submitted them to the Braeburn group yesterday evening.  When the average is published, I'll post a link here.  My Highlights:


Revenue 42.231 billion 


This is only a 48% YOY increase in performance.  Last year at this time, Apple posted revenue of 28.571 billion.  The last 4 quarter YOY percentages are: 82% - 39% - 73% - 59% 


That 82% was last year's Q3.  If we were to see a performance of 82% revenue growth again this Q3, we would be at 52 billion in revenue..  52 billion revenue in one quarter will happen - but not until Q1 13, but it won't be 52 billion - It will be 70 billion and that equates to 56% growth YOY.  That's about how I see the YOY revenue growth for a while, settling in at the 50% range, which is nothing to sneeze at when you are talking about this size of number.


EPS - 12.82


65% YOY growth. Compared to prior quarters, this is actually conservative. I'll go back 8 quarters on this one starting with Q3 10. 75% - 68% - 75% - 92% - 122% - 52% - 116% - 92%.  The only EPS percentage below 65% is the Q4 11 miss due to the delay of the iPhone 4s. I have no problem with 65% YOY growth, and I'm confident this will be achieved.


iPhones - 32 million; Revenue = 20.672 billion


32 million represents 57% YOY growth, and -10% sequentially.  The growth in this category is moderate (historically speaking) due to potential buyers holding off for the much anticipated iPhone 5 with 4G LTE.  In Q4, we will be lucky to see this number if the 5 doesn't launch until October.  We can only hope for an early September launch to boost the Q4 iPhone numbers, while staving off the Android / Samsung onslaught. 


Macs - 4.620 million; Revenue = 5.913 billion


17% growth YOY, and 5% sequentially.  The upgrade of the macbook line will help this category, these growth rates are typical of the Mac line of computers, unlike the rest of the PC makers flailing 
around in single digit growth, if not negative growth, due to the popularity of the iPad.


iPads - 21 million; Revenue = 11.025 billion


Apples first 20 million iPad unit quarter should happen right here, with a total units sold of 21 million. With an average ASP of 525 due to the high demand of the iPad 2, total revenue will be just over half of what the iPhone produces.  Apple most likely won't break out these numbers, but I believe that Apple will sell 7 million of the lowest level iPad 2.

iPods - 6.5 million; Revenue = 1.020 billion

The iPods continue to decline at -14% YOY, but are still big sellers for children that are not yet old enough to have a phone.  We are truly raising the "APP generation".  10 years from now, when the world's 8 - 10 year olds are 18 - 20, the App TV generation should be in full swing, with Apple TV fully integrated into people's lives as buying content ala carte becomes the norm. 

Peripherals - Revenue = 600 million 

Software - Revenue = 800 million 

Music / Other - Revenue = 2.2 billion

Above is the rest of the revenue story, with Music / other actually eclipsing iPod revenue, which I believe is going to be an even bigger story in the years to come, due to iCloud, and total convergence when iTV finally arrives.  I haven't got the numbers in front of me, but I plan my next post to be about the growth over the last 5 years in this category, complete with YOY percentages.



Fiscal year end:
Revenue = 170 billion 
EPS = 52.49

I revised EPS downward from my price projection post, due to the iPhone 5 most likely NOT launching until October.  Obviously if I hear otherwise, I will move back to 54.69. 


I am long AAPL

1 year price target - June 1, 2013

The Braeburn group, which I am an active member of, is publishing a 1 year price target average..  This will be an average of the participants that want to participate in the PPS projection..  The following is my post within that group.

Here’s my projection…  I’m basing my numbers on a 13.5 PE assumption.  The following numbers are starting Sept 1, 2012..  The pattern that I am projecting for each quarter is for PE expansion before and after earnings, followed by compression at the 2/3 quarter mark - down to 13.5. 

13.5 PE might be conservative, but recent history has shown this to be the case, especially with the heavy manipulation by the institutional investors.. the big boys if you will.  The reason I claim manipulation is simple:

The stock ran like hell all the way up to 644 / share.. before earnings.  Then it drops to 530..  All in a short span of time.  644 = a PE of 18…  Then the stock falls all the way down to 530 for a PE of just over 12 bucks..  I don’t see the stock moving like that for any other reason than institutional investors getting involved in a big way.  Mainly because, there is absolutely nothing wrong with Apple.. With my earnings projections, I see Apple at $931.77 on June 1, 2013

Here is the earnings breakdown, quarter by quarter, beginning on Sept 1, 2012, followed by the price with a multiple of 13.5, and finally in parenthesis my quarterly earnings target.

Sept 1 - $46.24 = $624.24 (13.02)
Dec 1 -  $54.69 = $738.31 (15.50)
Mar 1 -  $63.32 = $854.82 (22.50)
Jun 1 -  $69.02 = $931.77 (18.00)

$530.12 is the "post earnings" low this quarter.. (12.9 PE) I’m saying that the same type PE compression will happen each quarter, of course it won’t happen exactly like that, but this is what I’m using as a guideline. As I write this on May 29th, we are sitting on $572.27 with a 13.94 PE ratio..  I’m using this formula for each quarter to come up with my final 1 year target of $931.77 on June 1 2013.

Additional highlights:  I’m projecting 55 million iPhones, and 33 million iPads for Q1 13…  Revenue comes in roughly at 71 b, when you add 12 million iPods and 6.5 million macs.
I’m counting on the usual catalysts that are discussed all over the web.

Mac refresh and continuing to grow at a 17% average for a full year

Continued iPad domination
An Amazing iPhone 5 rollout - (Oct 1)
China / Asia Pacific explosion.
No TV in 2013, but I believe it will happen by mid 2014..

I will post the Braeburn group average for PPS on June 1 2013, right here, just as soon as it's published. Come back around June 5th or so..

I will have my June quarter estimates up by Friday, June 29th.

I will post the Braeburn group June quarter consensus as well, when that is published..  Look for that in early July. 

Thanks for reading,

      Dennis Hildebrand

Preliminary Q2 numbers



iPhones - 38,500,000
Macs - 4,750,000
iPads -13,750,000
iPods - 7,500,000

Total Revenue: 44,065,000,000

EPS: 13.11 


Gross Margin: 44.4%


Apple will be reporting the numbers again around the 3rd week of April as usual.  We at the Independent AAPL analysts are getting our spreadsheets ready.  This is my second go round this quarter.  I started with iPads at 12 million a month ago, but I just bumped that up to 13.750 based on the aggressive rollout, and the Tim Cook factor. I also bumped up my iPhones estimates by 1/2 mil.


Now that Tim Cook is unabated by Mr Jobs - I mean that respectfully - I believe that we are going to see even more aggressive growth.  Mr Cook, in his own words, will continue to "make big bets" on the ramp up to product launches. It seems that even the mighty Mr Cook can't bet high enough for the mass hysteria to an Apple product launch.


In going through the numbers in Q2: 

• At 38.5 million iPhones shipped the YOY growth comes in at 106% and sequentially up 4% - Last years growth percentages were 113% and 13%.  The Q1 numbers this year, were such a massive blowout, that I'm taking the sequential percentage number down a skosh.  Last year in this period, we sold 18.6 million iPhones.  For FY 12 - I'm at 150 million iPhones shipped (+108%)
• MACs at 4.750 million is 26% YOY growth, and -9% sequentially. Last years total in this time frame was 3.760m.  For FY 12 - I'm at 20.45 million MACs shipped (+21%)
• iPads at 13.750 mil - thats 193% YOY and -11% sequentially. For FY 12 - I'm at 62 million iPads shipped (+92%)
• iPods at 7.5 mil.  Thats -17% YOY and -108% sequentially. For FY 12 - I'm at 34.5 million iPods shipped (-18%)
• Revenue at 44.065 billion is up 79% YOY and down 5% sequentially.  For FY 12 - I'm at 182 b (+68%)
• EPS at 13.11 is a 105% increase YOY and down a mere 6% sequentially. For FY 12 I'm at $56 (+102%)

Be aware  - The last time I made yearly predictions like this, in my commentary, my feeling was that I was being very aggressive..  well I got the MACs and iPads right on, but missed to the downside on everything else. Especially iPhones, revenue, and EPS.  Its here, if you want to check it out.  

I will update my estimates and post the final numbers before I ship them off to PED for the quarterly smack down.

Dennis Hildebrand

Some great information for Cancer patients

I'd like to take a brief time out from Apple talk to send those that are interested in some great information about cancer recovery or people that are engaged in any type of cancer battle.  This is from David Haas, he is a fellow blogger that has contacted me, and asked if I would publish some of his great stuff.  I checked it out, and this guy definitely has some good information..

Please check it out


Why exercise is important for cancer patients

You will find more links to his various blogs on this page

Thanks,
        Dennis