Why Apple Stock Broke $100 and Set an All-Time High (AAPL)

UPDATED 11:00 AM AUG. 20

Thanks to two effusive research reports, Apple Inc. (Nasdaq: AAPL) stock cracked the $100-a-share milestone yesterday (Tuesday).

The close of $100.53 also marked an all-time closing high for Apple stock. The previous all-time closing high (before the 7-to-1 stock split in June) was $702.10, or $100.30 adjusted.

In early trading this morning (Wednesday) AAPL hit $100.77, edging past its previous all-time intraday high of $705.07 pre-split, or $100.72 adjusted.

As of yesterday's close, AAPL stock is now up 25.43% year to date, compared to just 7.2% for the Standard & Poor's 500 index.

The price rise also has made Apple by far the largest company in the world by market cap. The Cupertino, Calif.-based tech giant's $601 billion valuation is way ahead of the next largest company, ExxonMobil Corp. (NYSE: XOM) at $423 billion.

Given all the excitement about fall product launches, including the iPhone 6 and the long-rumored iWatch, it was only a matter of time before Apple shares crossed the $100 mark. But yesterday's Morgan Stanley (NYSE: MS) report by analyst Katy Huberty and another by RBC Capital Markets analyst Amit Daryanani forced the issue.

"We recommend adding to positions into the iPhone 6 + iWatch product cycles," Huberty said.

Huberty listed a broad range of catalysts for the Apple stock price, and raised her price target from $99 to $110 with an "overweight" rating.

Daryanani mostly saw higher-than-expected iPhone 6 sales as driving Apple stock, in addition to new iPads and the potential for "other major product lines."

Let's look at these catalysts in more detail.

What the Analysts See Ahead for Apple Stock (Nasdaq: AAPL)

First and foremost, there's the iPhone 6, which is expected to debut at a special event Sept. 9.

Apple stockSupply chain data has forced Daryanani to reconsider his iPhone 6 estimate of 65 million units sold.

"Most supply chain data is pointing towards Apple gearing up to ramp 70-80 million iPhone 6 units across the two form factors (4.7"/5.5")," Daryanani, who also raised his price target for AAPL to $110, said. "This is a notable uptick from last year when the supply chain ramped 50-60 million units."

Meanwhile, Huberty noted that that iPhone loyalty has increased from 73% in December 2011 to 90% in March. The iPhone accounts for more than half of Apple's profits.

But Huberty didn't stop there. Here are some of her other reasons for being so high on AAPL stock right now:

  • The iWatch: Huberty believes the iWatch will be bigger than most people think. "We believe iWatch is an underappreciated market opportunity with the potential for up to 60M shipments in the first year," she said, estimating it will have margins in excess of 40%.
  • Earnings estimates up: Huberty notes that AAPL earnings estimates have been rising lately, and she expects them to continue to rise after the fall product launches and sales of the new products exceed expectations.
  • Vibrant new blood: This year Apple has added several heavy hitters to its executive roster, including new retail chief Angela Ahrendts, former CEO of Burberry; Kevin Lynch, the former CTO of Adobe; Paul Deneve, from Yves Saint Laurent; and Dr. Dre, Jimmy Iovine, and Ian Rogers from Beats.
  • Research spending up: Apple's R&D spending is on a pace to grow 60% year over year in the fourth quarter. Huberty says that and a spike in acquisitions shows that AAPL has plans to extend its iOS mobile platform beyond the iPhone and the iPad.
  • Music and app revenue up: Few have noticed, but Apple's revenue from the iTunes Store, including music and apps, has been growing steadily. Huberty says the iTunes business is now accretive to overall margins and corporate growth.
  • Cash back to shareholders: After ramping up share buybacks and hiking the dividend, Huberty estimates Apple will have a total yield of 8.5% this year. As the programs continue, AAPL stock will benefit.

For updates on Apple stock and other technology news, follow me on Twitter @DavidGZeiler.

UP NEXT: Apple has a lot of good stuff in the pipeline, but another initiative on the horizon has just as good a chance - if not better - to move the needle on AAPL stock over the next year. This is a $626 billion opportunity for the company...

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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