UBS Optimistic About Apple's Long Term

by , 8:30 AM EST, January 30th, 2006

UBS Analyst, Ben Reitzes, thinks that Apple has a very positive long-term outlook, despite current sentiments of some other financial analysts. He feels that Apple's shares have dropped 17 percent based on concerns about declines in iPod nano sales, the possibility of competition from Google and Microsoft, and the recent slew of negative news stories.

Although Mac sales may remain soft for the next few weeks in anticipation of more Intel-based models, sales should pick up again as new products hit the market. Mr. Reitzes anticipates we may see a new Intel-based iBook as early as April, as well as a new "media hub" product and related services later this year. He also speculates that Apple will release new iPod models, including a new media player before the end of the year, and possibly even an Apple-branded cell phone.

UBS is cutting only its near-term estimate for 2Q EPS from US$0.50 to $0.46 on revenue of $4.7 billion due to expected modestly lower Mac and iPod sales. The fiscal 2006 EPS estimate is now $2.14, down from $2.24 on revenue of $20.5 billion. Fiscal 2007's EPS, however, remains at $2.75.

UBS is maintaining its target price of $100 based on pent-up demand for new products, as well as the potential growth in digital content.

Apple stock is currently trading in the pre-market at $71.46, down 0.57 (0.79%).

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