Apple Shares Shine On

"We still believe a 30+ forward price-to-earnings multiple is warranted for Apple, given prospects for sequential revenue acceleration in the fiscal first quarter of 2007 and year-over-year revenue reacceleration throughout fiscal year 2007," wrote Reitzes. He is long the stock and his firm has provided Apple with nonsecurities services.

Growth in Macs will be an important catalyst in the coming year, observers say. For its fourth quarter, Apple surprised the Street with its robust Mac sales, which grew 30% year over year to 1.6 million units.

"I would expect for them to continue to gain share," says Stice, who has a buy rating on the stock. "Over the next 12 months, we think it's really Mac sales that will help drive earnings growth going forward."

Worldwide, PC shipments are expected to be up 10% this year, says Stice, and Apple has been growing at an even-faster clip. In addition, Apple has less than 5% of the PC market worldwide. "I think that's something that they could easily double over the next couple of years," he says.

"Because they have such a small portion of market share (for PCs), that's where you have a lot more incremental upside," Stice says. He recently raised his 12-month target price to $110. He does not own shares, and his company doesn't do banking.