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Analyst: Apple Positioned for Strong Growth
by , 9:40 AM EDT, July 20th, 2006
UBS analyst Ben Reitzes was pleased with Apple Computer's earnings report on Wednesday, and thinks the company could be positioned for even more growth. Apple posted its second-highest quarterly earnings fueled by strong Mac sales, good iPod sales, and higher margins.
iPod sales were better than Mr. Reitzes expected, coming in at 8.1 million units instead of his projected 7.8 million. Mac sales showed a 12 percent increase year over year, climbing up to 1.33 million.
He does, however, note that Apple showed weaker than expected performance in Other music, peripheral & hardware, and software revenues. The lower sales may be a side effect of weaker iPod sales.
Apple's mix of hardware is filling out nicely, and the pending addition of an Intel-based replacement for the Pro-level PowerMac G5 and Xserve G5 before the end of the year will balance the product mix.
Mr. Reitzes is especially looking forward to the Apple-branded cell phone that Peter Oppenheimer hinted at during the earnings conference call. "Of all of Apple's new product opportunities, we are particularly excited about cell phones long-term, given our view that consumers clearly want content—but lack true "plug and play" phones with the PC," Mr. Reitzes said.
UBS is raising its earnings per share estimate based on an improved product mix and higher margins. Mr. Reitzes expects Apple to show an EPS of US$0.49 for the fourth quarter of 2006, up from his earlier estimate of $0.47, on revenue of $4.63 billion. EPS for fiscal 2006 has been adjusted up to $2.14 from $2.00. Fiscal 2007 is now $2.65, up from $2.55 based on annual revenue of $23.7 billion.
Mr. Reitzes is raising his target price for Apple from $77 to $80, and maintaining his "Buy" rating.
Apple stock is currently trading at $60.28, up 6.18 (11.42%).
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Thu Jul 20, 2006 11:25 am Subject: Analyst Apple positioned for strong growth, Duh!!
Analyst, Apple positioned for strong growth, Duh!!
Why do they even bother opening there mouths and say stupid things which everyone knows already. Last week they were predicting doom and gloom and the stock fell off a cliff because for some stupid reason they all actually believed that. Why? I don't know because when the Intel Macs came out the sales were very strong. Then when the Macbook Pro's came out, sales were very strong. Then when the Macbooks came out, sales were very strong. How does that turn into a bad lower than expected quarter? The iPod sales were also better than a year ago. Analysts, make no sense at all.
This guys is just full of insightful observations! Apple positioned for strong growth. Other music and software revenue deacrease MIGHT be due to decreased iPod sales. WOW!
Let's see... chronologicall we have WWDC, new iPod nano, back to school buying season, holiday buying season and MacWorld in January. Gee you think the stock is gonna go up?!?! Analysts are smart!
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