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Friday, January 13, 2006, 07:00 am PT (10:00 am ET)

PJ ups Apple target to $103, expects split soon

Based on this week's announcements at Macworld and expectations for continued market share gains for both Mac and iPod over the next two years, research and investment firm PiperJaffray today raised its target price on shares of Apple Computer from $80 to $103.

Although there has been growing chatter that Apple is becoming a new representation of an "Internet bubble stock," analyst Gene Munster begs to differ. "We believe this label is unfair," the analyst wrote in a research note released to clients on Friday morning.

The analyst believes 2006 is poised to be the year of both iPod growth and, more importantly, Mac market share gains, which will significantly drive earnings upward.

In addition to new iPods and Intel-based Macs, the Munster expects Apple to look to new product categories by year's end, possibly including mobile phones, other consumer electronics entertainment devices.

Looking beyond this year, the analyst sees the Apple story continuing to gain momentum in 2007, as the company is addressing the fastest growing market segments that touch the digital consumer.

"Given Apple's current trajectory, legitimate competition in these markets in 2007 is unlikely," he said. "While seemingly aggressive, we expect Apple can outperform the competition for multiple years, assuming the current pace of innovation continues."

While not necessarily a catalyst for Apple's business, PiperJaffray said another Apple stock split should deliver a mild positive for Apple shares. The firm notes that Apple shares last split in the $80 range, and says it expects a 2-for-1 split will be announced by Apple soon.

PiperJaffray maintains an "Outperform" rating on Apple shares.