NEW YORK (AP) — Shares of Apple edged up in premarket trading Thursday and a Credit Suisse analyst initiated coverage of the technology company with a whopping $500 price target and expectations for “outsized” revenue and earnings growth.
Apple’s shares climbed $4.99, or 1.5 percent, to $335.50 in premarket trading. The $500 target price is 51.5 percent above Apple’s closing stock price on Wednesday.
The prediction from Credit Suisse comes one day after JMP Securities downgraded the stock, saying that Apple faced supply issues.
Analyst Kulbinder Garcha, who rates the company “Outperform,” said Apple should be able to pull off earnings and revenue growth of 50 percent and 46 percent, respectively, over the next two years. This, he added, is “significantly” ahead of Wall Street’s expectations.
“(Three) years after the launch of the iPhone, few competitors have managed to narrow Apple’s advantage,” Garcha wrote in a note to investors. The iPad, meanwhile, is addressing a worldwide tablet market that could be as much as $120 billion by 2015.
“Within this segment, we believe Apple will dominate, given aggressive pricing, time to market advantage and a software edge, maintaining share as high as 50 (percent) long term,” he added.
Garcha said Apple’s “rebirth from the difficult days of late 1990s has been spectacular,” starting with the iMac, then the iPod, the iPhone and most recently the iPad.
“The impact to earnings for the company has been staggering and has allowed Apple’s market value to be among the top 10 globally, rising 60 fold over the past decade and 5 fold over the past 5 years,” he wrote.
Garcha did note that the health of CEO Steve Jobs, who is currently on a leave of absence, is an investment risk for Apple, even more so than at other companies. Jobs, he said, is credited with being “very personally involved in the continuous string of product hits” the company has seen in recent years.
“It is clearly hard to know the precise impact that Steve Jobs has on Apple,” Garcha wrote. “It is without a doubt significant but it would also be naive to assume that the employees and the senior management team … have not had a hand in Apple’s success.”