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AAPL Rockets On Earnings
Apple once again blew away analyst estimates for calendar second quarter yesterday with a big upside to the iPhone, iPad and Mac business lines. The stock is up about 3% in a sideways market. Future potential catalysts include monthly NPD data (Mac / iPod business); iPhone unit updates and exclusivity expiration in the U.S and other major European countries; iPad shipment ramp and international expansion; new content revenue streams such as video and books; and possible entry into the TV market with a refresh of Apple TV. AAPL trades at 21x estimated fiscal-year 2010 EPS and 10x Enterprise Value / Trailing Twelve Months Free Cash Flow.The Street Is Going Wild Over Earnings And Guidance (Various)
Here are some highlights:
- Katy Huberty at Morgan Stanley expects a directional move in the stock higher in the second half of 2010 and believes upward estimate revisions could accelerate next year on the back of broader distribution for new products, like iPad and iPhone. Free cash flow continues to outpace earnings. She reiterates her Overweight rating and increased her price-target to $346.
- J.P. Morgan analyst Mark Moskowitz believes that Apple’s quarterly performance should restore investor focus back on the model’s high-growth stature. At the current valuation, Apple is trading like a value stock and not as the high-growth story in large cap equities. He reiterates his Overweight rating and is increasing his price-target to $400. Apple is also on the J.P. Morgan Analyst Focus List.
- Ben Reitzes at Barclays Capital believes that Apple deserves a higher multiple relative to both the group and the market given it is the best growth story in the long term. He also expects some new products later this year including new and improved iPods, a new Apple TV and new online services. The above consensus revenue guidance was also positive, however still conservative. He reiterates his Overweight rating and increases his price-target to $340.
- Piper Jaffray analyst Gene Munster believes investors will wonder if the pace of Apple’s growth is sustainable. He says — yes, given Apple’s small market share in large, growing markets. Revenue guidance was 6% above consensus, which is the highest since he’s been tracking the last 17 quarters. However, that could prove too conservative. He maintains his Overweight rating and increases his price-target to $371.
- Richard Gardner at Citigroup expects AAPL shares to be one of the best performing hardware names through year-end thanks to a plethora of product catalysts heading into the peak consumer buying season. Negatives, which are dwarfed by the positives, included weak desktop sales and margin guidance which puts pressure on EPS. He reiterates his Buy with a revised one-year price target of $350.
Tidbits From The Conference Call That Won’t Put You To Sleep (theAppleBlog)
If you fell asleep somewhere around Tim Cook, here are some fun facts. Apple announced the hundredth million iOS device (iPad, iPhone, or iPod touch) was sold sometime in June. More than 60 million people visited 293 Apple Stores last quarter, spending $2.68 billion. The company now has $45.8 billion in cash; enough to pay for the Olympics in Beijing, bailout Greece or buy Warren Buffet. I wonder if I could apply for a loan?
Antennagate Crushed A Missed Opportunity (Daring Fireballl)
John Gruber breaks down Antennagate and points out a missed opportunity. For the 3GS phones, 80% of consumers bought cases. That’s a big market, and Apple wanted in. The company could have made money with their own cases a year ago with the 3GS, but nowhere near as much as they could have now, as it has the only case in town that fits the iPhone 4. And the company would have cornered that market for weeks. Thus, the reason Steve Jobs sounded so annoyed. He missed a $100 million dollar opportunity.
David Einhorn Has Been Buying Apple, Believes It’s Undervalued (The Wall Street Journal)
Greenlight Capital Inc., a hedge fund led by stock picker extraordinaire David Einhorn, bought shares of Apple during the second quarter because the company viewed Apple as undervalued based on growth prospects. Greenlight bought the shares at an average price of $248.09. It’s now pushing $260.
Amazon Should Thank Apple For The Increase In E-Book Sales (BNet)
Amazon announced that ebook sales have gone up. While it comes at a time when the discount retailer finally lowered the price on Kindles, there is no way that the price drop could have been responsible for the three-month claimed increase of e-book sales. What was the tipping point (although Jeff Bezos will never admit it)? Apple and the influx of 3 million iPad units.
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