Edible Apple

Apple shares have risen with breakneck speed over the past few weeks, reaching an all-time high of $422 this past Thursday. Still, it may not be time to sell your Apple stock just yet as shares may continue to climb upward into the lower $500 level.

In a recent research note to investors, Goldman Sachs analyst Bill Shope increased the company’s stock target for Apple shares from $480 to $520 on account of “increasing competitive momentum” and a litany of new products in the pipeline. Shope specifically cites the upcoming fifth generation iPhone release along with the Fall introduction of iOS 5 and iCloud, followed by the expected early 2012 launch of the iPad 3.

For the September quarter, Shope anticipates Apple to generate $28.71 billion in revenue and to deliver EPS of $7.30. For the 2011 calendar year, Shope anticipates revenue of $118.48 billion and EPS of $30.53.

Bolstering Shope’s bullish outlook on Apple is the fact that Android tablets have largely failed to pose any sort of competitive threat to Apple. The HP Touchpad was a flash in the pan, the RIM Playbook isn’t selling in significant numbers, and devices like the Motorola Xoom and Samsung Galaxy have been equally unsuccessful at putting a dent in Apple’s domination of the tablet market.

Addressing some oft-repeated concerns that Apple has hit its ceiling, Shope points out Apple’s share of the smartphone market is only 15%, leaving the company ample opportunity for growth ahead.

AppleInsider summarizes some of Shope’s other points:

[Shope] also dismissed claims that Apple will struggle now that Steve Jobs has stepped down as CEO. “Apple does not need to reinvent the platform; it just needs to continue executing solidly and managing the platform, which we believe Mr. Cook and the current bench of executives will be more than capable of doing,” he wrote.

As for the argument that Apple’s gross margins will inevitably decline, Shope posited that Apple’s robust content and application ecosystems and its loyal and active installed base will allow the company to preserve its margins and protect it from commoditization.

Finally, Shope mentions that Apple maintains a low P/E ratio – something we’ve highlighted before – and that Apple’s position as the largest company in the world via market cap is no reason to think that the company’s stock price can’t soar to even greater heights.