The iPhone factor has given a substantial boost to Apple’s shares, which closed at $122.04 on Friday — but many analysts have factored in huge sales of the iPhone and still believe that the shares are undervalued.

Shaw Wu, an analyst with American Technology Research, believes that Apple “continues to be one of the strongest fundamental stories” and expects the shares to rise to $145. PacificCrest expects them to hit $130.

JPMorgan is less optimistic. Bill Shope, an analyst at the bank, is “neutral” on the shares, noting that Apple stock is trading at 36 times its earnings estimate for this financial year, against a peer group average of 26 times. Nobody knows the extent to which iPhone will hit iPod sales or whether the handset will turn out to be the next big thing, or merely a nice but expensive mobile device. The latter would be a disaster for Apple and its shares, given the hype that the phone’s launch has received.

Apple and Nokia both had operating margins of 13 per cent last year. If Apple sells ten million iPhones at an average of $550 in its next financial year, it would make $5.5 billion in revenue, giving an operating profit of about $715 million, based on the 13 per cent operating margin figure. This would value the phone part of Apple – defined, very roughly, as the $34 billion increase in market capitalisation since the new venture was announced — at about 47 times operating profit.

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