You ever watch popcorn pop? The oil gets hot, the kernels start moving around, and then one pops. And another. And another. Then four or five, and then pretty soon, it gets so hot that everything pops all at once.
Check out what's going on today on Wall Street with Apple and you gotta wonder whether these are merely the first two kernels to pop a few weeks before the company reports earnings.
Thomas Weisel raised its rating on Apple this morning and upped its target from $188 to $195 a share, saying the company's current range "excessively discounts" its longer term opportunities. At the same time, Caris raises its target from $155 to $170, thanks to stronger-than-anticipated iPhone sales.
Let's begin with Caris because the company hits head on the recent controversy and speculation surrounding iPhone's success -- or shortage, depending on your perspective.
The firm cites three possibles for the recent shortages: production issues, intentional clearing of the channel ahead of the 3G release, and increased demand. While the firm won't discount the first two reasons, it's quick to point out that "there is no denying that strong demand is also a factor." And that's spurring Caris to raise its iPhone unit shipment on the quarter from 1.8 million to 2 million, and its full-year 2008 estimate from 8.9 million to 9.6 million.
Over at Thomas Weisel, the firm focuses on Mac sales, expecting the computer unit to generate $14.2 billion for Apple's fiscal '08. That'd be a 38 percent year-over-year pop, or almost 4 times the pace of the rest of the industry. (You hear that, Dell and Hewlett-Packard?)
On the iPhone side, the optimism might be a tad muted, but there's still optimism nonetheless, with the firm expecting Apple to at least meet its stated goal of 10 million iPhones sold during calendar 2008.
The question now is whether the rest of Wall Street will follow suit with these upgrades, or bide their time ahead of earnings.
This has been a rough, whipsawed quarter for Apple investors. Shares were at $180 three months ago, dipping to $120 a few weeks ago, and now surging today toward $160. Seems like these new targets, while higher than they've been, are still very much in reach -- if Apple at least meets earnings expectations. Not its own, but Street expectations, that is.
Nevertheless, Wall Street seems to be coming around to the idea that Mac momentum is truly something extraordinary and that iPhone, especially the new 3G version, will be the big news that keeps the Apple story going.
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