The Lead: Analysts predict $20 billion valuation for Twitter, larger iPhone and iWatch for Apple
In Silicon Valley, "What have you done for me lately?" is becoming "What do I think you can do for me next year?"
Twitter has yet to announce a stock price for its initial public offering, but analysts Monday began declaring their thoughts on how Wall Street should value shares that don't yet exist. Apple is still pushing the iPhones it just launched last month, but analysts are focused on the company's next round of smartphones and possible other gadgets.
Twitter made its prospectus public Thursday, allowing potential investors and others to dive into the important numbers from their financial performance ahead of a highly anticipated IPO expected to take place next month. While the San Francisco microblogging service provided the necessary facts about its business, it did not include many of the details about its actual offering: Twitter said it seeks to raise $1 billion by selling shares, but did not list a share price nor the total number of shares it expects to sell or retain after the offering.
That didn't stop SunTrust from becoming the first investment bank to grade Twitter shares and place a price target on them, with analyst Robert Peck releasing a gargantuan note Monday morning that labeled Twitter shares a "Buy" with a price target of $50.
"The company is the dominant player in the geo-targeted, real time interest graph, which provides unique optionality that few others can match," Peck wrote.
The analyst assumes that Twitter will charge $28 to $30 per share in an offering of 50 million shares, which would value the company at up $16 billion. That figure is consistent with analyses that place Twitter's in-house value at $12.8 billion -- based on the company's perceived share value in August -- and predictions from Ironfire Capital and Gamco Investors, who believe Twitter will have a valuation of $15 billion to $20 billion on the open market.
Apple is used to wild predictions about its future offerings, with the focus on its popular consumer devices ratcheted up for years now. Jefferies analyst Peter Misek, who has spent much of the past year pulling down his Apple price target and casting doubt at the Cupertino company, made a headline-grabbing switch Monday that predicted Apple would put a larger screen on its next iPhone product next year.
Less than a month after pulling his price target down and predicting production issues with the iPhone 5S and iPhone 5C, Misek said that visits with Apple's Asian suppliers revealed plans to increase the screen size of the iPhone from 4 inches to 4.8 inches with the next model, which he expects to be released in September 2014. Misek believes that such a move would spur users who did not upgrade their iPhone to the most recent model to upgrade, and he strongly boosted predictions for Apple's 2014 and 2015 earnings.
"We think the 85M iPhones eligible for an upgrade when the iPhone 6 launches (we think Apple is targeting Sep 2014) could be boosted by another 5-10M from people who skipped the 5S/5C cycle," Misek wrote.
Misek, who dropped his price target to $425 in his negative September note, pushed that all the way up to $600 in Monday's release.
Piper Jaffray analyst Gene Munster has been one of the most active prognosticators for Apple products; his latest prediction Monday was that Apple would sell 5 million to 10 million so-called "iWatches" if the company were to begin selling such a device in 2014.
Apple stock reacted positively despite a down day on Wall Street, though shares suffered a late dip, closing with a 1 percent gain at $487.75.
SV150 market report: Wall Street continues to flag, but Tesla's rebound marches on
Wall Street fell Monday as the shutdown of the federal government entered its second workweek, with indexes reaching their lowest level in a month as investors fear a default by the United States that could cause an economic upheaval. Silicon Valley stock performed slightly better, with the SV150 dipping 0.6 percent as Tesla Motors (TSLA) joined Apple in fighting Wall Street's downward trajectory.
Tesla suffered large losses on Wall Street last week, after a video of one of the Palo Alto carmaker's Model S sedans ablaze soured sentiment. After CEO Elon Musk made a forceful defense of the cars' performance Friday, noting that they suffered far fewer fires than gas-powered automobiles on average, the stock turned around. On Monday, the rebound continued, with Tesla gaining 1.2 percent to $183.07 as Jefferies analyst Elaine Kwei issued a note agreeing with Musk and boosting her price target from $160 to $210. "Based on our discussions with investors and opinions expressed by current/prospective owners, it appears the Model S is still considered safer than conventional vehicles, in contrast to media headlines questioning electric-vehicle safety," she wrote.
Intuitive Surgical joined Tesla and Apple in gains after JPMorgan analysts wrote that the Sunnyvale company's Da Vinci robot "has evolved from being a tool with limited uptake in the surgical suite to a diversified platform." Intuitive Surgical increased 4.6 percent to $380.99.
Facebook and Google (GOOG) headed the other way after teaming up to seek cheaper Internet access around the world. Facebook fell 1 percent to $50.51 after Raymond James analysts downgraded the stock but Piper Jaffray increased its price target, and Google fell 0.8 percent to $865.74 while fighting sites that collect mug shots of people who are arrested. Hewlett-Packard (HPQ) dropped 1.6 percent to $20.93 ahead of its analyst day on Wednesday, Yelp fell 4.5 percent to $69.93, Yahoo (YHOO) declined 2.2 percent to $34.14 and Gilead decreased 2 percent to $61.77.
Up: SolarCity, Applied Materials, Tesla, Apple, Intel
The SV150 index of Silicon Valley's largest tech companies: Down 7.63, or 0.57 percent, to 1,334.92
The tech-heavy Nasdaq composite index: Down 37.37, or 0.98 percent, to 3,770.38
The blue chip Dow Jones industrial average: Down 136.34, or 0.9 percent, to 14,936.24
And the widely watched Standard & Poor's 500 index: Down 14.38, or 0.85 percent, to 1,676.12
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.