Apple Investor: Wall Street Went Wild With Weekend iPad Predictions, But Mostly Came Up Short

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AAPL Ends Week Strong Going Into The iPad Weekend
AAPL shares closed Thursday’s session up at $235.97 (20x estimated fiscal-year 2010 EPS and 19x Enterprise Value / Trailing Twelve Months Free Cash Flow). Upcoming catalysts include March quarter results (likely the third week in April); March NPD data on Mac unit sales; launch of the next generation iPhone this summer; and the CDMA (Verizon) iPhone launch anticipated later this year.

Apple Says It Sold 300K iPads Over The Weekend (Apple)
This morning Apple said it sold over 300,000 iPads in the U.S on Saturday (including pre-orders, channel partners and Apple stores). That is well below some analyst expectations and whisper numbers on Wall Street. iPad users also downloaded 250,000 eBooks form the iBookstore as well as 1 million apps from the App Store during the first day.

Analysts Increase Estimates As iPad Weekend Proves Successful (The New York Times)
Wall Street analysts weigh in on the iPad launch:

  • Bill Shope, Credit Suisse analyst, says that demand was strong for the iPad over the weekend and he was “surprised by the lack of material supply constraints” which he believes is an “encouraging development.” He believes his June quarter estimate of 1.1 million iPad units is achievable. Apple remains his number one stock pick with an Outperform rating and 12-month price-target of $300.
  • Deutsche Bank analyst Chris Whitmore raised his calendar 2010 ($61.7 billion in revenue and EPS of $12.50) and 2011 ($71.6 billion in revenue and EPS of $16.00) estimates for Apple due to greater iPad and iPhone demand. He also raised his price-target to $325. He “expects investor focus to shift to Macs and iPhone refreshes over the next several months, which are the primary drivers of Apple’s earnings power.”
  • Gene Munster at Piper Jaffray took a leap of faith and upped his iPad estimates for weekend sales to 600-700K.  This proved to be nearly double what Apple reported over the weekend. Munster also raised his fiscal year 2010 EPS estimates to $11.56 to account for $0.20 in increased iPad sales. He maintains his Overweight rating and raised his price-target to $289.
  • Doug Reid at Thomas Weisel Partners raised his estimates on Apple to reflect positive channel checks on iPad sales (with positive impact to gross margin), glowing feedback about the iPad, and increased confidence in the prospects for a CDMA phone launch sooner than anticipated.

It’s Not Too Late To Buy Apple Says Analyst (CNBC)
Mike Abramsky, managing director of RBC Capital Markets, tells CNBC that Apple is a Buy at these levels. The next catalyst for the iPad will be the second generation due to hit the market as early as six months from now.  Abramsky believes the next generation will likely address some initial issues (lack of USB, Flash, etc.). In his opinion, Apple has created a netbook replacement which is at the lower-end of pricing. Given this new market as well as the strong momentum in Mac and iPhone sales, he is advising investors to buy the stock.

Apple Stock A Sell Now That iPad Has Hit The Market? (Navivest)
Now that the iPad has hit the market and the stock has run up on the sheer anticipation, Apple stock could pull back some. Technicals suggest the shares are nearing resistance levels, which suggests the stock could have hit a near-term top. “Apple could give up some recent gains and traders can look towards taking some downside profit.” Will this scenario happen today?

Apple To Try And Convince World Need For “Third Device” (The Economist)
While met with enthusiasm this weekend, Apple’s real struggle will come from convincing the masses (not just tech dorks and Apple junkies) that there is need for another device that sits somewhere between the iPhone and the computer. Success will largely rely upon how Apple develops the “ecosystem” around the product. That being said, the new iPad is disruptive technology for consumers and businesses alike.


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