TMO Reports - AmTech Research Raises Apple Target Price, Sales Estimates

by , 12:15 PM EST, November 3rd, 2005

American Technology Research analyst Shaw Wu on Thursday issued a new research report in which he raised his target price for Apple's stock from US$63 to $66 and increased his sales estimates on the strength of stronger-than-expected iPod sales.

Mr. Wu said that his checks with industry and channel sources show that not only are the new video-capable iPods selling better than he expected, but he believes they may even be outselling the iPod nano. "We believe vPod buyers are mostly installed base users attracted to its high storage capacity (30 GB and 60 GB), video capability, and reasonable price points ($299 and $399), while nanos are attracting more mainstream MP3 users," he wrote.

As a result, Mr. Wu has raised his revenue and EPS estimates for the current quarter to $4.8 billion and $0.52, respectively. While he's left his iPod sales forecast unchanged at 9.4 million units, he has increased his ASP (average selling price) to $192 from $185, given the higher prices of the full-size iPods. In addition, he increased his FY06 (fiscal year 2006) and FY07 EPS estimates to $1.90 and $2.15, respectively.

Finally, he reiterated his "Buy" rating, which he kept because "our concerns with high investor expectations, competition, the INTC transition, and even valuation have lessened. We believe AAPL is well-positioned to continue above market growth rates with arguably the industry's most powerful and complete stack of hardware, software, and service."

At 12:16 PM EST on Thursday, Apple shares were selling for $61.78, up 3.05% for the day.

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