Apple Inc. (AAPL)’s iPhone Revenues Growing At 45%: Kulbinder Garcha

Apple Inc. (NASDAQ:AAPL) has been the subject of quite a few price targets recently. A ridiculous number hovering in the $200 range was thrown in by Carl Icahn, which didn’t receive a lot of backing from the investor community. Kulbinder Garcha, who is an analyst at Credit Suisse adorned Apple with another price target on his interview on CNBC.

$110 is the number that Credit Suisse values Apple Inc. (NASDAQ:AAPL) at. Garcha revealed an interesting dynamic that is taking place within the iPhone business which he said was earlier unaccounted for. It is the traction that the new iPhones are getting because of their higher memory capacity.

“[…] There is very important makeshift happening within the iPhone business, not only more towards the iPhone 6 Plus much more than the industry anticipates but also much towards higher memory content devices and what that basically results in is gross profit dollars in the iPhone business expanding as much as 45% from the fiscal year ’13 base […]” said Garcha.

Garcha’s figure is much more sensible than Icahn’s, considering that Apple Inc. (NASDAQ:AAPL) was trading at $98.75 at the end of the trading day today. However, given the market uncertainty and high volatility, owing to macroeconomic conditions, such as growth concerns in Europe, an unusually strong dollar and diving oil prices, the price target seems a bit on the high range.

Garcha wanted to distinguish his estimate of Apple Inc. (NASDAQ:AAPL)  from that of Icahn’s and he did that by stating the reasonable price to earnings ratio that the bank used in their valuation. He even used the word conservative, which Mr. Icahn might have to look in a dictionary, when and if he hears him.

“[…] We applied twelve times multiple and one of the things we want to factor in is some conservatism. We recognize that fiscal year ’15 estimates are really a peak kind of product cycle earnings number […],” explained Garcha.

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