updated 10:20 am EDT, Mon September 17, 2007
Analyst ups AAPL estimate
Research firm American Technology Research is raising its estimates for Apple's performance based on strong iPhone, iPod, and Mac sales momentum. Senior research analyst Shaw Wu says the Cupertino-based company is very likely to beat its own guidance by a large sum: "Based on our checks with supply chain sources, we believe Apple is on track to beat its guidance substantially," Wu wrote in a research note obtained by MacNN. "Our sources indicate broad strength across business lines and a favorable high-end mix." American Technology Research is raising its forecast to $5.96 billion in revenue and $0.83 in earnings-per-share, up from $5.8 billion and $0.73, beating Apple's own guidance of $5.7 billion and $0.65 as well as Wall Street consensus of $5.94 billion and $0.81. Wu expects a gross margin of 32.5 percent -- up from 30.8 percent -- vs. guidance of 29.5 percent. The analyst is reiterating his 'Buy' rating with a $185 price target on Apple shares.
iPod, Mac momentum
"Much to our surprise, Apple is seeing strength from nearly all new iPods. We had anticipated strength from the new 'fat boy' Nanos, but higher-priced iPod classics and iPod touches are also doing well," Wu said, who is raising his iPod unit estimate to 11 million from 10.4 million.
Wu says sources indicate continued strength in Mac sales, driven by back-to-school shoppers and 'switchers' moving to Macs for the first time. Overall demand for Macs is stronger than anticipated, according to the analyst, revealing an unexpected shift toward high-end Macs. American Technology Research is raising its Mac unit forecast to 2 million units from 1.95 million.
Rising iPhone sales
iPhone sales have regained momentum, despite fears of potential cannibalization from new iPod models and potential backlash from Apple's recent price cut. Wu expects Apple to ship 900,000 units -- up from 770,000 and guidance of 730,000 -- in the September quarter.
"While we are concerned with potential softness in US consumer spending, it appears that Apple is once again positioned to buck the trend with its compelling product line and strong international exposure (52 percent of revenue). We recommend buying Apple on pull-backs and see upside to $185 in 6-12 months."