UBS lowers AAPL target, maintains 'buy'

Research firm UBS today lowered its price target on Apple's stock, but maintained a 'buy' rating despite possible weakness in iPod sales. UBS analyst Ben Reitzes said that the company's stock price already reflects slightly below consensus earnings for the March quarter as well as cautious guidance. "Weak iPod unit sales (9 million units or lower) may be expected. However, we still believe company guidance of $4.3 billion in sales and EPS of $0.38 is conservative given strength in 'other music' sales. We believe that March quarter EPS over $0.40 could be considered a positive given the recent plunge in shares," Reitzes wrote in a research note to clients. The analyst estimates that Apple will earn $0.43 EPS on revenue of $4.46 billion, slightly below consenus estimates of $0.44 EPS on $4.6 billion. Reitzes said that he expects iPod sales of 9.6 million and a year-over-year Mac unit decline of nine percent to 979,000 units; however, he believes that Apple's "solid" 'Other Music' segement would help bolster the quarter with nine percent revenue growth -- helped by both accessories sales and growth in iTunes.

The research firm also believes that any guidance offered by Apple for the June quarter would be conservative in light of possible Mac introductions.

"Given seasonality & the Mactel transition, we expect Apple to issue conservative guidance for fiscal third/"June" quarter (last year AAPL guided for flat quarter-over-quarter revenue for the June quarter)," he told clients. "We believe this outlook may be conservative given a few new Macs slated for June."

Apple is expected to report earnings on April 19th.

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