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Apple still undervalued, say analysts as price targets rise

Apple CEO Steve Jobs speaks during an Apple Special event to unveil the new iPad 2 at the Yerba Buena Center for the Arts on March 2, 2011 in San Francisco, California. Apple unveiled the iPad 2 as the successor to its popular tablet, the iPad.

Justin Sullivan/Getty Images

Despite leaping by more than 3 per cent on Wednesday after the company obliterated analyst expectations for its third-quarter, many on Wall Street believe Apple Inc. shares still have a lot further to run.

Several analysts raised their price targets on the stock after digesting news late Tuesday that the company more than doubled earnings in the latest quarter from a year ago, as iPhones and iPads flew off store shelves.

Brigantine Advisors raised its price target by $50 to $450, with analyst Kevin Dede commenting that sales should continue to grow given Apple's integrated software functionality across different product lines. "We can only imagine the strength provided through that integration of software and service should only increase with the release of iCloud and future sharing software programs," he said in a research note.

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Canaccord Genuity analyst T. Michael Walkley was even more optimistic, increasing his price target to $510. The stock briefly surpassed $400 in after-hours trading on Tuesday. "We anticipate continued strong earnings growth for Apple, and it remains one of our top picks," he said in a research note.

Mr. Walkley pointed out that Canaccord's store checks point to only "modest" sales of most competing tablet offerings, including Research In Motion's Playbook. "As a result, we anticipate strong sales of the iPad2 for the September quarter and are modeling iPad units ramping from 9.3 million units in the June quarter to 10.2 million units in the September quarter," he said.

Other analyst actions, according to MarketWatch, included:

- Piper Jaffray analyst Gene Munster raised his price target about 10 per cent to $607

- Oppenheimer analyst Ittai Kidron raised his price target to $460 from $420.

- Fleacher & Co. analyst Brian Marshall raised his price target to $500 from $450.


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Yahoo Inc. , which saw its stock sink to fresh 2011 lows Wednesday after reporting disappointing second-quarter revenue, should continue to underperform the technology sector, said Canaccord Genuity analyst Heath Terry. Yahoo's weak performance is particularly noticeable given the broad strength in the online advertising market, and Mr. Terry is concerned with uncertainties surrounding its Asian assets, the direction of its search business, and the company's inability to drive user engagement.

Downside: Mr. Terry cut his price target to $14 and continues to rate it as a "hold."


One month after upgrading the stock to a "buy," TD Newcrest analyst Doug Young is raising his price target and financial estimates on Manulife Financial Corp. . He believes Manulife will benefit from improved macro economic conditions over the next 12 to 24 months and thinks the insurance sector is under-owned.

Upside: Mr. Young increased his price target by 50 cents to $19.


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CIBC World Markets Inc. analyst Barry Cooper believes Lake Shore Gold Corp. will have to restate reserves at its Timmins Mine in Ontario using a lower grade, leading to higher operating and capital costs. The mine has been struggling to meet delivery targets since its startup, and Mr. Cooper believes the market will now discount future plans for expansion.

Downside: CIBC downgraded the stock to "sector underperformer" from "sector performer" and slashed its price target to $3 from $4.50.


TD Newcrest analyst Jonathan Kelcher believes Chartwell Seniors Housing REIT has taken a "step in the right direction" with this week's acquisition of the remaining 50 per cent interest in 15 U.S. properties from ING Real Estate Community Living. He believes the purchase price of $169-million (U.S.) for the 2,947-suite portfolio is attractive and makes strategic sense, as having full ownership of its U.S. properties provides greater flexibility to sell non-core assets in the future.

Upside: Mr. Kelcher upgraded Chartwell to a "hold" from "reduce" and maintained a price target of $8.


Torstar Corp. , which reports second-quarter results July 29, "continues to represent a near-term trading opportunity based on operating leverage from the ad cycle," argued Paul Steep of Scotia Capital Inc. The firm is paying off debt thanks to the sale of its share in CTVglobemedia, and the stock "is likely to experience gains as it reports results over the next several quarters," he said.

Upside: Mr. Steep rates Torstar as a "sector outperform" with a one-year price target of $18.

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