Goldman Sachs Resumes Coverage On Apple With CL-Buy

Goldman Sachs is resuming coverage of Apple AAPL with a Buy rating and 12-month target price of $430 and placing it on its Americas Conviction List. Goldman believes Apple's platform-centric business model is the secret sauce that has enabled it to quickly capture market share in new computing segments while simultaneously enjoying considerable margin leverage. Goldman believes significant growth and profit opportunities for this platform still lie ahead. As a result, it expects revenue and earnings expectations to continue to trend upward, and it views the shares as attractive at current levels. Apple's recent gross margin trends and guidance have caused some concerns among the investing community. Goldman's analysis of Apple's platform history not only suggests that this gross margin erosion is normal, but also that it has probably already seen the worst of it. Goldman believes Apple's margins have already bottomed, and it expects the company to resume its leverage-driven upside in coming quarters. In addition, Goldman expects iPad and iPhone momentum to exceed expectations in 2011, driving further upside. We expect Apple to ship 37.2 million iPad units in CY11, which could potentially make Apple one of the largest vendors in the global personal computing market. The key risks to the target include: macro deterioration, increased platform competition, potential legal and regulatory restrictions, and uncertain management succession plans. AAPL closed Friday at $320.56