Apple’s (s aapl) stock price reached a lofty milestone in pre-market trading early this morning, crossing the $300 mark for the first time in company history. It reached as high as $301.50, and remains above $300 (as of this post time) after opening bell today.
During the course of the past year, Apple’s stock price has experienced 40 percent growth, based mostly on the strength of the iPad’s success in bolstering its already strong sales of iOS devices. Compared to the overall NASDAQ average growth of only 1.2 percent, Apple’s success is meteoric.
Andy Perkins, a Societe Generale analyst based in London, told CNNMoney.com that part of the reason behind Apple’s ballooning stock price is its ability to beat expectations consistently. “The anticipation was as they shipped more the price would lower,” said Perkins, talking about the iPad .”But the margins have kept much higher than people had anticipated.”
Apple does not pay dividends on its stock, despite some analysts urging them to do so, arguing that a payout could encourage growth. Cupertino stopped dividend payouts in 1995, when it decided to focus all of its revenue back into growth at a time when it was locked in heated competition with Microsoft (s msft).
Some argue it no longer needs to do that, and could spend some of its roughly $50 billion cash on-hand in dividends for investors, or in repurchasing shares. Others aren’t so sure, arguing instead that Apple should continue to hold on to its cash so it has plenty of room to innovate. A smaller cash pile would mean it could absorb less risk, meaning more ambitious projects might fall by the wayside.
So can Apple continue this level of success? Analysts, predicting strong fourth-quarter results, say yes. Bank of America (BofA) (s bac), Merrill Lynch (s mer) and Oppenheimer (s opy) have all raised their price targets for Apple recently. BofA is now setting $400 as its target price, up from $360, while Oppenheimer’s has gone up to $345 from $330. One of the primary reasons for the new targets was that Apple itself has projected fourth-quarter revenue exceeding analyst expectations, despite being a company that normally embraces much more cautious estimates.
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