MORGAN STANLEY: This Is How Apple Is Going To $1,000 (AAPL)



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Apple could be worth $960 by this time next year, argues Katy Huberty at Morgan Stanley in a big report.

Her official 12-month price target is $720, but she laid out a “bull case” for how Apple could soar to $1,000.

In her bull case, revenue for calender year 2012 is $200 billion, a 56% increase over calender 2011. She forecasts $271 billion in revenue for 2013, a 36% increase.

For some context, Apple’s revenue grew by 68% in 2011, and that’s in a relatively quiet year for the company. iPad 2 was a redesign, it added Verizon, but iPhone 4S wasn’t a big refresh.

Apple would have to sell 165 million iPhones in 2012 (77% growth), and 246 million in 2013 (49% growth). In  2011, iPhone unit sales grew by 96%.

iPad unit sales would be 80 million in 2012 (98% growth), and 128 million in 2013 (61%). iPad unit growth for 2011 was 174%.

Are those insane targets for Apple to clear? Well, Apple easily Huberty’s “bull case” last year. So, it’s doable.

The future is always uncertain, but this year is shaping up to be really big for Apple. It’s already revealed a new iPad, while at the same time cutting the price of the iPad 2 down to $400. There is zero competition for the iPad, and no reason to think that’s changing this year. (We’ll believe Windows 8 is a threat when we see it. And we don’t think we’ll see it until November at the earliest.)

The next iPhone is coming at some point later this year. It is expected to support LTE, which Huberty believes will drive a ton of upgrades. The new iPhone is expected to be a complete revamp. Apple sold a record number of iPhones when it was an incremental upgrade. Imagine how well it will do when it’s totally revamped and runs on a fast new network.

And then there’s the Apple television, and upgraded Mac line up, neither of which Huberty mentions, but each of which could drive even more sales for Apple.

In short, Huberty’s bull case doesn’t sound all that outrageous. And therefore, $1,000 a share sounds reasonable.

Here are the three scenarios for Apple’s stock

BULL CASE ($960): Apple continues to dominate in the tablet business, the iPhone continues to sell well, and growth accelerates in China as the iPhone hits more carriers. In 2013, iPhone sales reach 247 million units. iPad sales reach 129 million units. Revenue grows 56% in calender year 2012, and 36% in 2013.

BASE CASE ($720): Revenue growth of just 37% in 2012, and 20% in 2013.

BEAR CASE ($405): Microsoft’s Windows 8 clobbers the iPad, and growth slides into single digits.




And here is the bull case for Apple to get to $1,000 …





The iPad is big in enterprise, and it could generate $5 billion in extra sales




See the rest of the story at Business Insider

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