Analyst Charlie Wolf provides semi-annual updates on his AAPL 12-month price target. Friday, he increased that projection from $450, originally set in February, to $540, but for different reasons than price target raises in the past.
In Wolf's latest projection, the iPhone only contributed modestly to his increased price target. Instead, he has increased his models for Mac and iTunes revenue.
Wolf breaks down Apple's projected value per share with a dollar amount assigned to each of the company's major product categories. In the latest numbers, iTunes saw the largest percentage increase in value, up 82.3 percent, to represent what he called "explosive growth in iOS applications sales."
In addition, he expects the iPad to capture a larger share of the tablet market going forward than was previously anticipated. In Wolf's model, the iPad accounts for 12.2 percent, or $65.62, of the $540 price target.
This year, Wolf sees total iPad shipments of 35.6 million units, up 137.4 percent year over year. In 2012, he anticipates Apple's tablet will grow another 52.5 percent, to 54.3 million units shipped.
"The increase in our price target is not an exercise in 'keeping up with the Jones,'" he wrote. "There's no rule that says our price target always has to rise. Indeed, it could fall if Apple's semi-annual performance trailed our forecast.
"Of course, in Apple's case it has not done so since the emergence of the iPod, which was followed by the iPhone, iPad and the Apple Stores."
The iPhone still represents the lion's share of Apple's stock value, in Wolf's eyes, though he has reduced its percentage share to less than half. Previously, the iPhone accounted for 53.4 percent of the stock's projected value; now it's estimated at 49.2 percent, or $265.86 of the $540 price target.
Total iPhone shipments are projected to hit 77.3 million units in 2011, with Apple capturing 19 percent of the smartphone market. In 2012, Wolf sees Apple's share growing to 20 percent, with sales of 108.1 million iPhones.
"Since the iPhone represents almost half of Apple's value, even a modest shortfall in the iPhone's growth would have an outsized impact on the company's fair value," the analyst cautioned. "We are more comfortable with our iPad valuation. However, the tablet market is still so young that the trajectory of iPad sales could turn on a dime."