Piper Jaffray has raised its price target for Apple (AAPL) from $160 to $205. up 28% which is stunning. Apple trades at $143 now. So, a stock that is up 130% over the last year would rise another 43% from the current price.
The new target price is based to a large extent on an estimate by the firm that Apple will sell 45 million iPhones in calendar year 2009, at an average price of $330.
The forecast is nutty for several reasons. First, Motorola (MOT) sold 35 million phone in that last quarter for an annual run rate of 140 million phones. The company has dozens of models and relationships with most of the major cellular carriers around the world. It took more than a couple of years to build those relationships. Motorola also has 2G phones, 2.5G phones, 3G phones, and maybe ever 1G phones. It designs phones priced for everywhere from India to England.
The idea that Apple will sell a third as many phones at Motorola sells now is not credible. Especially at a price point that would be much higher than the average price that Motorola and Nokia (NOK) get, which is under $100 per unit. The Apple estimate also assumes that the larger handset companies will not come out with competing phones.
No way, no how.
Douglas A. McIntyre
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