Apple: Credit Suisse Ups Target to $750 on Smartphone Share
By Tiernan Ray
Credit Suisse’s Kulbinder Garcha this morning reiterates an Outperform rating on shares of Apple (AAPL), while raising his price target to $750 from $700, after raising his estimates for the global smartphone market and concluding that Apple’s iPhone is poised to gain share, and that Apple is prepared to “excel” in the “compute market” across its various devices.
Garcha sees Apple’s smartphone unit share rising from 18.9% globally last year to 23.2% this year and 23.3% share next year.
That would mean an increase from 89.3 million iPhones in 2011 to 159.7 million sold this year to 205.9 million next year.
Garcha’s note on Apple is accompanied by a separate, massive, 86-page note covering every conceivable aspect of the smartphone industry.
As he details in that note, he raised his 2012 and 2013 smartphone shipment estimates by 9% and 15%, respectively, he writes, to 688 million and 885 million, as the devices become more broadly affordable and more essential to everyday life.
Garcha’s estimates for global smartphone growth see an increase of 37% between now and the end of 2013, and a 26% increase in shipments, per annum, compounded annually, between now and 2015.
That would mean an increase from last year’s shipments of 471.7 million to 1.176 billion units by 2015, he writes. All together, that would represent a market of $272.28 billion come 2015, up from $156 billion last year.
Garcha bases that on the fact that there were 762 million smartphone subscribers at the end of 2011, and that “we believe that effective penetration for smartphones could rise from 33% in 2011 to slightly over 100% by 2015.
Apple has the advantage of offering wares across different computing devices, writes Garcha:
For now at least we believe that Apple is materially advantaged, principally because the company’s vertically integrated structure allows it to simultaneously address all three markets ie PCs, tablets and smartphones effectively. Moreover, much of the innovation comes in software. Add to this the broad range of “i-Services” that are built well beyond iTunes; to include an apps store, iAd service, iBooks and now iCloud; the company allows consumers to seamlessly access content across multiple devices. The issue is that when considered in the context of the entire compute market in volume terms Apple have a ~17% share, this will rise given their exposure to the relatively faster growth smartphone and tablet end markets to 27% longer term.
A good chunk of that growth will come from emerging markets, writes Garcha, and not just China:
The next 50 carriers in EMs [emerging markets] could add over 50 million units per year. Having analyzed the telecom market by carrier, we create a list of top 50 carriers in EMs (in terms of mobile subscriptions) where Apple still does not have any carrier relationship for selling the iPhone. Put together, these top 50 carriers account for 1.84bn mobile subscriptions, as we show in Figure 81. We expect this number to grow to close to 2bn by next year. As a reminder, 2bn subscriptions will account for 32% of the global subscriber base in 2012. This shows that Apple can significantly expand its opportunity in EMs by simply addressing these carriers.
From a financial perspective, Garcha is estimating Apple will generate $170 billion in revenue this fiscal year ending in September, and $46.43 in EPS.
Apple shares today are up $2.82, or half a percent, at $628.99.
Copyright 2011 Dow Jones & Company, |
