UBS raises Apple estimates, price target

Research firm UBS today raised its earnings estimates for Apple shares through fiscal year 2008 due to higher margins, and upped its price target from $124 to $133 based on the firm's new 2008 earnings-per-share estimates. Apple yesterday reported a record March quarter with a gross margin of 35.1 percent and earnings-per-share of $0.87, well above Wall Street's consensus of $0.64. The company saw better than expected margins, with revenues of $5.26 billion beating out the research firm's estimated $5.12 billion. "Mac units of 1.517 million beat our estimate of 1.495 million with the upside driven by strong desktop sales," said UBS analyst Ben Reitzes. "We believe Macs will continue to have solid momentum through fiscal year 2008 as the Multiplier Effect continues." UBS reiterated its 'Buy 2' rating on Apple shares.

The firm is estimating 2007 third quarter earnings-per-share at $0.70, up from $0.65, on 20 percent revenue growth to $5.22 billion. UBS is also guiding for a gross margin of 32 percent, up from 29.6 percent, and an operating margin of 14.9 percent, up from 13.5 percent.

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