By Philip Elmer-DeWitt
April 2, 2012

How exactly did Brian White come up with that number? 

When last we heard from Ticonderoga’s Brian White, a few hours after Apple (AAPL) reported its Q1 2012 earnings, he was reiterating the 12-month price target he had set the previous July: “Apple crushes even the most optimistic expectations,” he wrote. “$666 here we come.”

Two days later, Ticonderoga closed up shop.

On Monday White resurfaced at a new firm, Topeka Capital, with a new Street-high price target guaranteed to draw attention to itself: $1,001.

“Apple fever is spreading like a wildfire around the world,” he wrote in Monday’s note to clients, his enthusiasm for the company undiminished, “and we see no end in sight.”

What’s odd about White’s new price target — which is at least $201 higher than the most bullish of his colleagues — is that the model supporting it is actually rather modest.

We know of four professional analysts who have called for higher Q2 revenues than White’s $37.02 billion, nine with higher EPS numbers than his $10.06, and 15 with higher iPhone unit sales estimates than his 29.64 million. The only number that sticks out in White’s spreadsheet is his estimate of 14.47 million iPads, which is higher even than all but two of the most bullish independent analysts.

So how did he get to $1001? By factoring in Apple’s cash holdings, anticipating continued breakneck growth and using a P/E ratio from 2006-2010:

Our 12-month price target of $1,001.00 for Buy-rated Apple is based on just over 17x our interest expense/income adjusted CY13 pro forma EPS estimate plus net cash per share of $103.66. This equates to a straight P/E of just over 19x our CY13 EPS estimate and is below the mid-20 multiple of 2006-2010. In our view, Apple’s valuation does not reflect the growth the Company has been able to deliver in recent years, nor future growth prospects. Between FY04-FY11, Apple grew sales by 44% per annum and increased EPS by 86% per year. Trading at a P/E (ex-cash) of just under 10x our CY13, we believe the stock still has significant upside potential.

Investors must have liked the sound of that. Apple’s shares closed at $618.63, up $19.08 (3.18%) for the day.

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