Apple value exceeds HP

 

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Posted on 27 Jul 2007 at 08:47

Apple is now worth more than Hewlett-Packard and fast catching up with IBM and Intel. The sharp rise yesterday in the company's share price, following better than expected quarterly results, raised Apple's market capitalisation to more than $127 billion. HP is valued at around $124 billion.

Having passed Dell earlier this year, Apple is now the highest valued PC maker, despite having less than 5% of the worldwide market.

Analysts queued up yesterday to revise their targets for Apple's share price, which stood at $146 at the close of trading. JMP Securities, Caris & Co, UBS, Pacific Crest, American Technology Research, Credit Suisse, Deutsche Bank and Piper Jaffray all raised their target price, to $160 at the lower end of the scale and as much as $211 in the case of Piper Jaffray.

Pacific Crest analyst Andy Hargreaves set a target of $175, up from $130, saying he expects Mac sales to grow by almost a third in the current quarter.

"Back-to-school sales, expanded distribution and a likely refresh of the iMac product line-up should drive Mac sales growth above 30 percent in fiscal Q4," he wrote in a note to clients. "We believe that Apple can continue to drive strong growth in high-margin service and accessory sales, which should benefit gross margin, despite the likely negative impact of rising component costs."

Apple chief financial officer Peter Oppenheimer intimated this week that Apple will unveil new products this quarter.

UBS analysts Ben Reitzes said that the iPhone will create a second "halo effect" that will drive new iPod and Mac sales.

"We believe investors should focus on Apple being in the process of creating another version of the 'multiplier effect,' which we call 'Halo 2'," Reitzes wrote in his investors' note. "We believe the build up to the launch of the iPhone and its ongoing excitement is driving sales of accessories, boosting retail traffic, and helping drive sales of iPods and especially Macs."

Like Hargreaves, he said he anticipates an iMac redesign, as part of an overhaul of the Mac range that will see the introduction of the long-anticipated ultraportable, lightweight laptop.

"In addition, we continue to believe Apple may be working on some kind of 'ultra-portable PC' or some kind of device that can bridge the gap between media playing, basic wireless computing needs, and even some type of gaming," he wrote, though the latter sounds like little more than a souped-up Apple TV.

Shaw Wu of American Technology Research attempted to strike a balance between pessimistic bears who underestimate Apple's profit potential and bulls who make "overzealous and sometimes outright irrational
estimates".

Raising his target price from $165 to $185, Wu said iPhone revenues and Mac sales "were upside surprises".

Apple sold more than 250,000 iPhones in the first 30 hours which Wu noted was in line with his estimate, although below "overly aggressive forecasts" of half a million or more.

Author: Simon Aughton