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Apple on Pace to Be Most Valuable Company…Maybe Ever

Apple’s market value will rise to $480 billion over the next 12 months, surpassing Exxon as the most valuable company on earth, according to the updated price targets from analysts following the iPhone-maker’s blockbuster earnings report this week.

Apple Store
Flickr: hairygrumpy
Apple Store

The Steve Jobs-led tech giant could even see its market value climb above $600 billion, according to the most bullish forecast on Wall Street from Ticonderoga Securities. That would top Cisco’s record market capitalization of more than $550 billion reached in 2000 at the height of the Internet bubble.

“Apple continues to defy modern principles of economics and delivered the investment community something never seen before (e.g., quarterly revenue of $28.6 billion growing 80 percent year over year),” wrote Gleacher & Co. analyst Brian Marshall, in his updated report where he raised Apple’s 12-month target price to $500 from $450.

“We expect Apple will become the largest market cap company on the planet when the stock hits approximately $445.”

Apple’s stock price was around $388 on Thursday, up 20 percent from the start of the year after second quarter results Tuesday showed booming demand for the iPhone and iPad. With 926.9 million shares outstanding, Apple’s current price puts its market capitalization at around $360 billion.

Who would have guessed that selling phones and tablet computers would become a more valuable enterprise than refining the fuel on which the global economy runs? Exxon Mobil’s market value is currently the highest in the world at $410 billion. PetroChina is a distant third behind Apple at $271.6 billion.

“Given the momentum in Apple’s portfolio and inexpensive valuation (10 times current year 2011 EPS, ex-cash), we believe the stock will ultimately reach our 12-month price target of $666,” said Ticonderoga’s Brian White, whose updated price target is up from a previous $612 forecast and is the highest among all analysts who cover the stock.

“The expansion of Apple’s presence in the mobile phone market with the iPhone still remains in the early stages as the mobile Internet ramps around the world with increased smartphone penetration.”

At least 12 analyst firms came out with price target increases after assessing this week’s results, according to theflyonthewall.com. The new report with the lowest price target came from Morgan Stanley, which upped its forecast to just $468 from $428. At that price, Apple would still become the largest company in the world over the next year (assuming Exxon stays flat), sporting a market value of around $444 billion.

Analysts extrapolating from the shocking sales figures released this week are fueling the optimism. The bright outlook is also built around the release of Apple’s cloud product and the iPhone5 this fall, according to analysts. There is also speculation about a China carrier deal and a new TV product that would complete Apple's so-called "halo effect" of mobile, office and home.

The technology landscape has certainly changed (largely because of Apple) since the time when Cisco’s market capitalization topped $550 billion and Internet euphoria had some predicting it would become the first $1 trillion company.

It’s been quite a reversal of fortune for the world’s largest maker of routers, as Cisco shares are down 75 percent since March 2000. Besides the bursting of the Internet bubble, Cisco’s performance has been hurt by smart switching technology that would weaken demand for routers.

Acquisitions outside of its core business such as set-top box-maker Scientific Atlanta and Flip Video, have also dampened the outlook for the company, which now sports a market value of under $100 billion. This week, Cisco said it would reduce its workforce by 6,500 employees.


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