AAPL Gains On Intel Quarter
Getting a lift from Intel’s explosive quarter, AAPL is trading up with the rest of tech. The shares are up about $2 to $245. Upcoming catalysts include March quarter results on Tuesday, April 20 (after close); the international release of the iPad (May 10); and the launch of the next generation iPhone anticipated this summer. AAPL currently trades at the high-end of the tech group at 20x estimated fiscal-year 2010 EPS and 19x Enterprise Value / Trailing Twelve Months Free Cash Flow.
- Piper Jaffray’s Gene Munster expects shares of AAPL to continue its gains over the next quarter based on momentum within the Mac and iPhone businesses. Given the positive NPD data on PC unit sales, Munster is raising his quarterly Mac growth estimate to 32% year-over-year, versus consensus of ~22%. iPhone units should be above the Street’s expectation of ~6.8 million as well, driving better-than-expected margins. Munster maintains his Overweight rating and is increasing his price target to $299.
- Bernstein Research’s Tony Sacconaghi believes there is upside to his quarterly EPS estimate, driven by higher revenues and better gross margins. Taking a slightly contrarian approach, Tony believes that Apple is the best secular story long-term, but does not believe that investors should add to positions in the near-term given the stock’s recent run and high expectations heading into the quarter. That said, he reiterates his Outperform rating and increased his price target to $275.
The iPad Is Going To Be Bigger Than You Think; You Heard It Here First (Fortune)
Morgan Stanley’s Katy Huberty has been one of the more bullish analysts on the iPad. She is seeing strong demand for the device with 4.6% of those surveyed extremely interested in purchasing one and another 16.4% somewhat interested. Huberty is confident in her above-consensus iPad unit sales estimate of 6 million in 2010. Overall she believes the market underestimates the earnings potential of Apple’s mobile internet devices.
U.S. iPad Sales Outpacing Internal Expectations, Apple Delays International Launch (Apple)
Apple is delaying the international launch of the iPad by a month (May 10) because the company can’t keep up with demand in the U.S. Apple calls U.S. orders of over 500,000 in addition to 3G pre-orders “a runaway success.” While great news that the U.S. market is tracking above internal expectations, it begs a few questions. What was Apple projecting in terms of demand? Are there component shortages? Is the company satisfying demand in the U.S. first? Are unit sales keeping up with the pace they saw that first week? More clarification likely when the company reports earnings next week.
iPhone 4G To Have 8-Megapixel Camera Courtesy Of Sony (TheStreet.com)
The iPhone has not had a strong track record in cameras compared to its competitors. However next year, for the release of 4G, the iPhone will offer an 8-megapixel camera from chip supplier Sony. There has been a lot of speculation around Apple’s 2011 iPhone as AT&T’s three-year exclusivity agreement ends. The launch could coincide with Verizon’s national debut of its 4G wireless network. The 4G Verizon iPhone would no doubt be viewed as a formidable entry in the smartphone race.
Morningstar Almost Upgrades Its Apple Rating Based On Mobile Network Effects (Morningstar)
Apple historically has made fairly niche-market products, but the iPad has the potential to be a mass-market device. Apple is building a dominant mobile platform, essentially recreating Windows for the mobile space. In doing so, the company is creating a massive network by attracting developers to the platform, driving more applications, and subsequently more users. Toan Tran, Associate Director for Tech, believes the iPad will become the computing device for the masses and completely displace Windows in the consumer market (we’re not sure we would go THAT far). The reason Morningstar won’t upgrade its rating? The Steve Jobs risk. Without the visionary, Apple will go the way of Microsoft (without Bill Gates).
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