UBS Warburg: Buy AAPL, Downgrades Dell Estimates [Corrected]

by , 7:00 PM EDT, April 11th, 2002

[Editor's Note: We originally reported that UBS Warburg had downgraded Dell's stock to a "Sell." That is incorrect, and Dell's stock is currently rated a "Buy" by UBS Warburg analyst Don Young. Our story below has been corrected to reflect this. In addition, the link we first posted to a CBS Marketwatch article has changed, and as of this writing, the link works.]

Wall Street firm UBS Warburg dealt two nice strokes to Apple's stock today as it downgraded estimates for Dell's unit sales growth for 2002, and upgraded Apple to a "Strong Buy." Analyst Don Young lowered his estimates of unit sales growth for Dell from 29% growth to 16%. He based most of Apple's rating upgrade on what he says should be a very good 2nd half of fiscal 2002 for the company based on iMac sales. From a CBS Marketwatch report:

UBS Warburg focused on the PC group, upgrading Apple Computer and slashing its 2002 unit shipment forecast for Dell Computer to reflect 16 percent year-over-growth to 19.7 million units, down from an earlier estimate for 29 percent growth to reflect a cautious stance on corporate IT spending.

The broker also took down its fiscal 2003 revenue estimate on Dell by 2 percent to $33.8 billion. Dell shares were slightly lower in Germany at $26.49 in small volume.

UBS said it upgraded Apple on optimism over the PC maker's new products. The broker raised its June and September quarter earnings per estimates to 16 cents and 20 cents from 14 cents and 16 cents respectively. The broker also raised its 12-month price target on the stock to $30.50 from $23.

"We doubt that Apple will meet March quarter expectations because of the supply constraints and rapid channel stocking very late in the quarter - but we believe this is somewhat expected and will be overshadowed by the second half earnings outlook," analyst Don Young told clients.

You can read the original article at CBS Marketwatch's Web site. Thanks to Observer Ralph Dietz for pointing us to this development, and thanks to Observer Michael for pointing out our error in the comments below.

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The Mac Observer Spin:

Note that Dell is still going to post some strong growth in terms of unit sales, and we would be surprised if Apple can match the same unit sales growth percentage. With the iMac being as popular as it is, it is possible, but the main point is that Dell's growth is coming at the expense of other Wintel PC makers. Any growth that Apple might achieve will also come at the expense of Wintel PC makers.

CBS Marketwatch Article