Already looking to calendar Q1 2012

Analyst interviewed by Barron's are generally bearish on Apple's outlook at least for the first calendar quarter of 2012, results of which will not be reported until April. Credit Suisse, Sterne Agee, Barclays Capital and Piper Jaffray analysts all had a generally positive outlook for Apple in the company's fiscal second quarter, with rumors of a third iPad launch late in the quarter and general strong numbers carrying over from the holiday season.

While two of the five firms rate AAPL "overweight," only one of the (Morgan Keegan) has cut its estimate in the near term. Analyst Tavis McCourt concedes that iPhone sales through the end of 2011 and were probably better than his original estimates, but believes the Kindle Fire tablet "cannibalized" as many as two million units that would have otherwise been sales for Apple's iPad.

Most reviews have maintained that the two products aren't really direct competitors but the general public is said to perceive the product as a lower-budget version of the iPad. McCourt is maintaining an Outperform rating on AAPL but cut the price target to $513 from $530, estimating only 13 million iPads sold (down from a previous estimate of 16 million).

He did raise his iPhone sales estimate for the holiday to 29 million units (up from 27M), but also trimmed Mac sales to 4.8 million units down from 4.9 million, citing economic woes in Europe. McCourt notes that this would still give Apple 17 percent year-over-year growth in PC shipments, considerably higher than the industry as a whole.

Credit Suisse analyst Kulbinder Garcha raised his estimates for the whole of Apple's fiscal 2012 to an Earnings Per Share (EPS) price of $37.49 (up from $36.76), and his 2013 fiscal EPS guess to $44.38 (up from $43.50). Garcha believes Apple sold 30 million iPhones in the holiday quarter and thinks the company will sell 133 million units in 2012, up from 86 million in fiscal 2011 (fueled in part by today's announcement of the iPhone 4S arriving in China).

He thinks Apple sold 14 million iPads last quarter and will move 57 million per year in both 2012 and 2013. Garcha rates AAPL as an "Outperform" with a $500 price target.

Shaw Wu from Sterne Agee rates Apple stock a "Buy," also with a $500 price target for 2012, but says that any "iPhone 5" launch will end up being more important to the company than even the iPad 3 or a rumored HDTV set. He argues that the iPhone currently represents 44 percent of revenue (and up to 60 percent of profits) for Apple, and also has the largest "addressable market" as more of the world's population switches to smartphones. Wu believes the next iPhone will embrace some form of "4G" cellular and will feature a "slightly" larger screen and a "radical update" of the form factor.

Piper Jaffray's Gene Munster maintains his "Overweight" rating on the stock with a $607 price target for 2012, guessing that buzz regarding new products to be introduced throughout the year should "play out well" across all of 2012, with an "iPhone 5, iPad 3 and potentially an Apple television" all being introduced this year.

Despite his optimism for 2012, Munster sees revenue rising just 13.8 percent in calendar 2013, though unknown "new products" in that year could raise that to as much as 28 percent revenue growth. He's predicting an EPS of $39.31 for FY2013 but his leeway could raise that as high as $6 per share.

Munster expects that along with the top of the line iPhone, the cheaper models will also drive market share expansion in 2012, resulting in revenue growth between 18 and 35 percent for the year. He is assuming the iPad 3 will replace the iPad 2 when it is officially announced, but notes Apple could retain the iPad 2 as a cheaper alternative to fend off low-cost knockoff tablets in the way that the iPhone 4 was reduced but continued when the iPhone 4S emerged. Taking this into account, iPad revenues could grow from 11 percent to 30 percent across 2012, with the lower-end representing his estimate if the iPad 2 does not continue to be offered and the high end if it carries on as a budget alternative.

Finally, Barclays Capital analyst Ben Reitzes also maintains his "Overweight" rating and $555 price target for AAPL in 2012, but notes that he expects the March quarter to be led by Apple's typically conservative estimates which may spook the street. He is estimating just under $39 billion in revenue ($9.66 EPS) for the quarter just finished, and a drop to $32.06 billion ($7.83 EPS) in the second fiscal quarter of 2012. This is slightly higher on both counts than the current consensus estimates.

The decline in the March quarter would represent an 18 percent drop from the previous quarter, but Apple typically forecasts a drop in fiscal Q2 of around 27 percent quarter-to-quarter in its more conservative guidance. The March quarter will also suffer from the lack of an extra week as Q1 has had, and a late-quarter iPad transition if the broadly-expected March introduction estimate is accurate. Reitzes believes Apple will also guide margins flat or down for the fiscal second quarter.

He added that "any potential concerns" about the March quarter should be "short-lived" with expected product refreshes alongside new models and potential new products expected to surface or just after the first half of the year. [via Barron's]

by MacNN Staff