AmTech positive on Apple

Despite Apple's heavy losses overnight, research firm AmTech is predicting Apple's stock will reach $220 per share and is rating Apple a 'Buy.' Apple gave unexpectedly cautious commentary on its future gross margin predictions in its quarterly report Monday, surprising investors expecting higher estimates. While Apple's current numbers were solid, Apple's commentary on 2009, predicting a lower 30 percent gross margin, surprised AmTech and other research firms. Apple was expected to predict gross margins in the 33- to 34-percent range.

Apple's lower 2009 guidance may be explained in its alert to 'product transitions,' possibly alluding to lower prices for Apple's product lines as it looks to compete in a slowing economy. Higher raw-material costs may also have influnced Apple's lower predictions.

AmTech believes that higher growth in iPhone sales will bring Apple a higher gross margin than it predicted, forecasting a 32.8 percent gross margin and a stock price nearing $220. With the likely pullback on stock price in the near term (Apple's stock dropped 10 percent following its earnings release yesterday in afterhours trading) due to Apple's conservative estimates, AmTech sees a buying opportunity for long-term investors.

by MacNN Staff