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Friday, January 04, 2008, 12:00 pm PT (03:00 pm ET)

Goldman ups Apple target, urges investors to remain long

Investment Bank Goldman Sachs this week raised its price target on shares of Apple Inc., recommending that investors hang onto shares of the company at least through its upcoming Macworld Expo and fiscal first quarter earnings announcement.

Apple chief executive Steve Jobs will present at Macworld on the morning of Tuesday, January 15, and the company is scheduled to report its December quarter earnings a week later on January 22.

"We would remain long into these events," analyst David Bailey wrote in a research report to clients. "Although we expect most of the hardware introductions at this year's MacWorld to center on new notebooks and a greater emphasis on software and content for iPods, iPhone, and Apple TV, there will probably be enough hints of what is to come later in the year, including the next generation of the iPhone and the introduction of a sub-notebook, to keep shares in check before Apple reports its holiday-quarter earnings."

Bailey believes the Cupertino-based company's December quarter results should once again show solid revenue and earnings upside driven by strong Mac and iPod sales. As a result, he raised his per-share earnings estimate for the December quarter to $1.60 from $1.51, as well as his calendar year 2008 and 2009 per share estimates to $5.35 and $6.55 from $5.05 and $6.00, respectively, mostly driven by higher Mac assumptions.

"At the same time, coming off another strong performance in 2007 with the stock up 133 percent, we do not think Apple shares will be as explosive in 2008, and upside moves are likely to be more measured," he added.

The analyst bumped his 12-month price target on shares of the company from $205 to $220, implying an approximate 13 percent upside.