Quote Originally Posted by Partial View Post
"RBC Capital Markets sees Apple earning $110 billion in revenue in fiscal 2011, growing to $140 billion in revenue the following year, and $167 billion by fiscal 2013. It has a $500 price target for AAPL stock."

http://www.appleinsider.com/articles...ne_4_hype.html

167 billion at 25-30% operating margin is just incredible. The race to $1000 continues!
There is a saying among analysts that, in the long term, the market is never wrong. What they mean is that the market determines the share price, regardless of what analysts think the price should be. So the market is never wrong, but analysts often are wrong.

So far, over the last two years or so, AAPL has climbed steadily, and that is a good thing. Momentum is a good thing. But, AAPL has missed the analysts share price targets continually. In spite of significant "beats" on earning estimates, the stock has moved upward more slowly than analysts have predicted, and that is a bad thing, because analysts' share price estimates are based on their earnings estimates. While AAPL has exceeding the analysts earnings estimates significantly, the share price has not hit the analysts targets.

In other words, the market has been less impressed with AAPL's performance than the analysts have been. That makes AAPL a stock that should be watched closely. If they ever barely beat the consensus earnings estimates, or miss it, the stock could top out. In short, the market may determine the "correct" P/E for AAPL to be far different than analysts think it should be.

The outlandish sales estimates like what you quoted give me concern as an investor. The more aggressive the analysts become in their sales estimates, the more likely it will be that AAPL will miss one. A miss from a company that has routinely beaten estimates by a lot will stop the share price momentum dead in its tracks.