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AAPL Stock: 520.27 ( + 2.31 )

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Analyst: Apple set to "buck the trend"

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."




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    0

    agreed

    you coulda bought AAPL 'round $120 not very long ago, already back up to $140 and change. Apple is one of those stocks you should buy on a pull-back because it is a fundamentally sound company with a bright future. Any dips in stock price are likely reflections of broader market concerns which hit all stocks both good and bad, rather than a reflection of any specific concerns about the stock/company.

  1. malax

    Joined: Dec 1969

    0

    disagree

    I have to disagree with the first poster. AAPL can be very volatile based on rumors and announcements--not based on general market trends. For example, it dipped to $120 because a) of the big pre-announcement speculative buying and b) because the announcement of the $200 iPhone price drop spooked people into thinking that Apple was slashing prices to make up for sales well below expectations.

    Go back and look at the history of the AAPL stock price over the past five years and you'll see that every major sell off (and there have been quite a few) have been sparked by Apple announcements (product announcements and financial announcements).

    In short, AAPL is not a stock for the faint of heart. It has as the potential to go through the roof (again) or it can crash spectacularly.

  1. ClevelandAdv

    Joined: Dec 1969

    0

    Growth

    Apple can flounder on rumors and speculations but when the real numbers come out it will always bounce back as long as the growth trend continues. The largest growth area is likely to be Mac sales. Apple has built a huge future base of customers whom will soon be buying their own (first) computer, rather than using Mom and Dad's PC.

    I expect Apple to get as high as 15% of the total PC sales in the US and 8% worldwide - this will boost share prices to the $200+ level.

    Of course I am just a stupid Mac-Zealot and not a professional analyst, and I have only been right on this stock about 80% of the time.

  1. lklarson

    Joined: Dec 1969

    0

    Apple Stock Volatility

    In short, AAPL is not a stock for the faint of heart. It has as the potential to go through the roof (again) or it can crash spectacularly.

    Of course the only way that can hurt you is if you sell it when the other dummies do.

  1. Terrin

    Joined: Dec 1969

    0

    First poster has it right

    I agree with the first poster, and for sake of full disclosure I will say I own Apple stock.

    Old school investing (not this Cramer c***) teaches you to look for a fundamentally sound company and invest for the long term. If you follow that advice, Apple fits the bill. Yes, it dips on rumors, yes if you have a faint heart you might very well die if watching fluctuating bother you (yet, you should never invest in anything if you cannot afford to lose it)..

    However, fundamentally Apple is a very safe bet if you are going to invest in stocks. It is very well managed, owes no money, has a multi billion dollars cash stock pile, and is entering exciting new markets where chances are good it will flourish.

    The only way I would bail on Apple is the fundamentals changed. There is nothing to suggest it will. At the current prices, Apple seems like a bargain. In the very least it is fairly priced.

  1. VinitaBoy

    Joined: Dec 1969

    0

    @malax

    The truth is, Malax, no one ever became rich buying high and selling higher. Neither has any investor been able to retire buying low and selling lower.

    If one is in the market for "stability," rather than growth, buy MSFT. It most certainly will not go UP appreciably ever again (a downside to all monopolies), but neither will it go down much. (Trading at 28.71 right now, off 3 from the 52 week high.)

    All personal wealth is based in part or parcel on RISK. Get used to it, or get out of the market and into 5% CDs.

  1. hokizpokis

    Joined: Dec 1969

    0

    stocks are insane

    if I had bought AAPL back in 1994 using that 20K of my 401k, today's value would make me a millionaire several times over... not too many investment would result in such wealth creation in 20 years.

    because AAPL's business model is so unique and AAPL has in fact created the very markets it serves, I see a very happy future for stock holders even after steve has retired and if AAPL stays on it's path it will be the #1 tech company ever... growing even bigger then any small soft competitors could imagine.

    choose your future wisely

  1. Constable Odo

    Joined: Dec 1969

    0

    stocks are insane....

    Yeh, you could have bought some shares, but Apple went through quite a few lean years when Steve disappeared and market share was dropping. You probably would have sold the shares for something else. Your ideal buying time would have been just before the iPod in 2000 or so. Man, I'm kicking myself. I didn't even see the purpose of an iPod. I think I was still using a cassette tape player at the time.

  1. rtbarry

    Joined: Dec 1969

    0

    um...

    you only lose money on AAPL when you sell it in a panic. if occasional volatility scares you, GET OUT OF THE MARKET!

  1. cj8n

    Joined: Dec 1969

    0

    750% gain

    Having recently sold some of my apple stock to pay off a loan I can say I'm very happy with the 750% return I realized on my meager apple investment. I bought when it was around $16 a share.

    Thanks Apple

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