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Morgan Stanley: Apple to $400?


The global economic outlook remains fraught but a technology analyst at Morgan Stanley earlier today made one of the most brilliant or most bone-headed predictions in recent memory: Apple at $400 a share.

In raising her price target to $310 from $275, Katy Huberty said investors continue to "under-appreciate Apple's future growth opportunities" adding that the company may register $20 per share in earnings during the 2011 fiscal year, and thus be worth $400 a share.

"The market underestimates the earnings power of Apple's mobile Internet devices," Huberty wrote. "We view the combination of new product launches, broader distribution [carrier, international, enterprise], more attractive pricing and strong upgrade rates as the key demand drivers over the next two years."

Huberty expects the company will sell about 61.5 million iPhones in 2011, or about 25 percent more than current estimates on Wall Street. Earlier today, Apple confirmed that CEO Steve Jobs will keynote its annual worldwide developers conference, an event where he may shed more light on the expected launch of the company's next-generation iPhone.

That's a bullish bet for what remains a premium product line. With unemployment still hovering at close to 10% and new economic worries about potential fallout from Europe's latest financial jitters, consumer spending remains a wildcard. Also, Apple also stepped-up competition in the smartphone business from Google's Android.

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