Frager Factor

Wednesday, September 26, 2007

Yared: $200 price target on Apple may prove to be conservative


I believe Apple shares are headed even higher. The popular iPod line has been around for over five years now, and the new generation is better than ever. The snazzy new iPods create buzz around Apple's music products and other products like the Mac computer line, and the company's word-of-mouth and visual marketing continues to shine with the mass consumer.

Apple goes beyond the "features for the money" approach of other digital music players. Buying an Apple product is now a cultural statement and provides a feeling of being in the "in crowd." Over and over again, there are arguably better products that try to compete with the iPod, but none have succeeded thus far because they cannot match that special feeling.

"Apple is in the midst of a major, major product release cycle. The iPhone sales have been more than solid and production for the rest of calendar 2007 has been raised from 3.6 million units to 4.8 million. European and Asian distribution is just beginning and with Apple's revenue recognition model set for iPhone sales over 24 months, the visibility of Apple's numbers just goes up that much higher. Investors will reward 'visible' numbers with a higher PE ratio," Yared writes.

"Apple is also in the beginnings of a new iPod launch. The iPod installed base is over 110 million units strong. Talk about a willing audience for the upgrade cycle! It re-enforces the visibility theme. The revamped Mac computer is in its second quarter of sales and this product upgrade cycle should last into the next 4-6 quarters," Yared writes.

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About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

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