updated 03:35 pm EDT, Mon September 21, 2009
Cites limits on growth
Bill Fearnley, an analyst with FTN Equity Capital, has dropped his rating for Apple stock, lowering it from Buy to Neutral. The analyst is generally positive about Apple's performance, noting that Mac sales are above forecasts, and that the fifth-generation iPod nano is a "big hit." iPhone sales are said to be meeting predictions, though there are stock shortages in some places.
The analyst's FY09 EPS estimate is being pushed from $5.94 to $5.97, while his FY10 figure is being raised from $7.08 to $7.22.
The problem, says Fearnley, is that Apple stock is presently very high -- valued at over $183 -- and it may have little room to grow further. On Monday shares had slid by $1.15 as of 3:30PM Eastern. Fearnley comments that Apple stock is already past FTN's most recent price target, which was set at $180.
Contradicting Fearnley's view is JP Morgan analyst Mark Moskowitz, who has assigned Apple an Overweight rating, and a price target of $210. Mac and iPhone sales are continuing to accelerate, Moskowitz says, providing good justification for raising EPS esimtates. FY09 EPS is now estimated at $5.92 rather than $5.84, and FY10's result is expected to be $6.96 instead of $6.58. In the short term, September quarter predictions are up from $1.37 to $1.45.
The quarter may also see a gross margin of 36 percent and an operating margin of 20 percent, climbs from respective 35.3 and 19.3 percent estimates. Moskowitz cites a more profitable mix in Mac and iPhone sales, along with help from Mac OS X Snow Leopard.