Increased Price Target On Apple (AAPL) Shares Provides A Boost To The PowerShares QQQ ETF (QQQQ)
“In a note to clients issued early Monday, Morgan Stanley’s Katy Huberty raised her Apple (NASDAQ:AAPL) price target to $310 per share (from $275), suggesting that investors continue to underestimate 1) continued iPhone share gains, 2) better-than-expected iPad demand, 3) the growing Chinese market, and 4) increased penetration of the corporate market. Huberty also raised her estimated 2011 iPhone sales to 61.5 million units, which she says is 25% higher than The Street’s consensus,” Philip Elmer-DeWitt Reports From Fortune.
DeWitt goes on to list three bullets for the increased price target largely based on a proprietary Morgan Stanley/Alphawise survey that showed:
- The percentage of current iPhone customers planning to upgrade rose sharply from 18% in Nov. 2009 to 58% in March 2010. Huberty estimates that the combination of a growing installed base and a rising upgrade rate could yield 19 million upgrade units in 2011.
- She expects Apple to cut the price of the iPhone 3GS to $99. If Apple (AAPL) and AT&T (T) could also find a way to cut monthly service costs to $75 from about $90 today, demand for iPhones, she estimates, would increase by another 7 million units per year.
- According to the Alphawise survey, 16.8% of Verizon (VZ) subscribers say they are “very likely” to purchase an iPhone when and if it becomes available on their network (in the second half of 2011 in Huberty’s base case, first half in her bull case). This could add another 8 million iPhones per year.
The news of the price target increase for Apple’s (NASDAQ:AAPL) shares has investors in the PowerShares QQQ ETF (NASDAQ: QQQQ) cheering with gains. The PowerShares QQQ ETF which tracks the Nasdaq 100 and holds a whopping 18.27% of Apple’s stock was up on the news. Apple by itself can determine the fate of this liquid ETF by holding such a large stake in it’s holdings. The QQQ’s which have been around for over a decade have so much riding on Apple’s success and right now investors have nothing to complain about.
Here are some more details we put together on the PowerShares QQQ ETF (NASDAQ: QQQQ) below for your viewing:
PowerShares QQQ™, formerly known as “QQQ” or the “NASDAQ- 100 Index Tracking Stock®”, is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The portfolio is rebalanced quarterly and reconstituted annually.
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