updated 09:35 am EDT, Thu July 20, 2006
AAPL up 12% in premarket
Apple's future looks bright enough for a second half stock rally and has led research firm UBS to raise its earnings estimates. The company's stock, boosted by a Merrill upgrade and a revised outlook by UBS, is up nearly $7 (12.8%) in pre-market trading. UBS raised its EPS estimates to reflect improved product mix and higher margins. The company now expects $0.49 earnings per share (was $0.47) for the September quarter based on revenues of $4.63 billion, representing 26 percent year-over-year growth. Analyst Benjamin Reitzes also raised the firms fiscal year 2006 estimate to $2.14 (was $2.00) with revenue of $19.1 billion, representing year-over-year growth of 37 percent. UBS also adjusted its fiscal year 2007 estimates up to $2.65 (was $2.55) based on increased revenues of $23.7 bilion (up 24% over 2006). Despite the adjustments, Reitzes still believes that his estimates may be conservative.
"We are raising our EPS estimates through FY07 to reflect improved product mix, as well as improved margins due to lower operating expenses," Reitzes told clients. "We believe our revised estimates are more consistent with 3Q06 trends, which reflect solid growth and improved profitability."