What is Apple’s Stock Really Worth?

Everyone wants a bite of Apple (NASDAQ:AAPL). Over the past few weeks, analysts have pumped up their price targets on Apple’s shares multiple times, and almost all have maintained a Buy rating on the stock. Apple’s market capitalization is expected to hit one trillion dollars, a figure that can only be done justice when said using Dr. Evil’s facial and vocal expressions. But is this company really worth the hype?

Many strategists worry that Wall Street’s love for Apple is sending its stock price up too far, too fast. Apple’s recent outsized gains, which helped take the broader market higher, are also a concern, as the company could eventually deflate in a way that would become a major problem for the overall market.

Analysts assert that Apple has a solid product offering, with more to come. Apple’s thriving ecosystem makes it very difficult for any of Apple’s rivals — Google Inc (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Barnes & Noble (NYSE:BKS) — to replace. Apple’s forward price earnings ratio of about 13 is also very reasonable.

Deutsche Bank (NYSE:DB) analyst Chris Whitmore took Apple off the firm’s high conviction list because of the high performance of its shares. However, the analyst says he hasn’t changed his “medium/long term bullish” view on the company.

Other analysts don’t seem to be concerned with the impact Apple could have on the rest of the market, but Peter Boockvar of Miller Tabak warns that people should not ignore that Apple is trading in a parabolic way that could end in flames. Boockvar is more cautious on the market in general, with Apple’s activity adding to his concerns. Rising gas prices are also an area of concern. According to Boockvar, the market has been forced to depend on cheap money, which can create problems if rates increase.

A flurry of firms, including Piper Jaffray (NYSE:PJC), Bernstein, Morgan Stanley (NYSE:MS), Jefferies (NYSE:JEF), and Canaccord Genuity, have raised price targets on Apple just this week, based on the anticipated iPhone 5 launch in the third quarter and iTV in the forth quarter. Firms have brushed off concerns over the new iPad and consider them overblown.

In other words, Apple has a lot of fans. Every Apple product seems to be a home run. The company has nearly 100 billion in cash, and investors are anticipating a dividend to be announced soon. The simple fact is Apple’s financial results are stunning.

Apple crossed the $600 mark for the first time Thursday, on the eve of its iPad launch, but closed lower in the day. Apple shares are up 45 percent so far this year, rising steadily above the $500 mark last month. Apple has contributed around 34 percent of the Nasdaq’s gains this year.

Many are concerned and hope that Apple will not stubble because of the effect it would have on the overall market. As consumers line up for the brand new iPad and Apple TV, and with a new 4G LTE iPhone to be released later this year, don’t expect analysts to downgrade Apple any time soon. That one-trillion-dollar market cap isn’t as ridiculous as it sounds.

To contact the reporter on this story: Diallah Haidar at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com