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Wednesday, August 22, 2012, 10:08 am PT (01:08 pm ET)

Needham ups Apple price target to $750 following recent surge

With three record high closing days in the last week, Apple's recent stock surge, along with continued strong sales by the company, have prompted Needham & Co. to increase their 12-month price target to $750.

Analyst Charlie Wolf only revises his price target for AAPL semi annually. Because of that, his 12-month price target prior to Wednesday was $620, or more than $30 below the price at which AAPL stock opened.

The new target of $750 is beyond the company's record share price of $665 reached earlier this week. The company's shares have nearly doubled in value from their 52-week low of $356.44.

Wolf said his price target increase is in response to across-the-board upward revisions in all of Apple's businesses. Each of Apple's different business segments is given a dollar value per share, and in his mind the iPhone accounts for $323.20, or 43.1 percent, of AAPL's projected $750 price.

Needham's new price target was driven largely by the iPhone, with a dollar-per-share value increase of $60.08 accounting for 42.4 percent of the increase. The value of the Macintosh platform was increased by $14.04 to $100.50, accounting for 13.4 percent of the projected share price, while the iPad grew $22.02 to $109.94, taking 14.7 percent of the forecasted value.

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"The unique feature of our model is that the growth in Mac sales is driven solely by the halo effects emanating from the iPhone and iPad," Wolf explained. "Changes in our forecast of iPhone and iPad sales, then, also impact Mac sales as well as software and peripheral sales."

The analyst noted that Apple remains a relatively small player in two major markets: smartphones and personal computing. Wolf's projections call for the iPhone to account for 22 percent of smartphone sales this year, while he believes the Mac's marketshare will grow from 4.8 percent in 2011 to 11.3 percent in 2021.

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Wolf also noted that Needham's price target adjustments over the last four years have not kept pace with the growth in Apple's earnings. Since 2008, Needham's price target has increased 220 percent, but Apple's earning have grown by 545 percent.

"Are we succumbing, like investors, to the law of large numbers?" he asked.