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Analyst: Apple Outlook is Conservative
by , 10:50 AM EST, January 3rd, 2007
Investors may be underestimating Apple Computer's value in 2007 in contrast to 2006, according to American Technology Research analyst Shaw Wu. He commented "As we look out over the next 6 to 12 months, consensus estimates, in our view, look reasonable, and will likely prove conservative, a very different scenario than in 2006. "
He added "One of our key concerns on Apple in 2006 was that we believed published consensus estimates were too aggressive (particularly revenue) and no where near Apple's guidance, but more importantly, didn't make any logical (financial or business) sense."
Mr. Wu feels that Apple's estimates have finally reset, which will give the company room to surprise investors on the upside. The company's expected product line up for 2007, which includes Mac OS X 10.5, the iTV home theater appliance, refreshed iPod models, new Macs, and possibly a cell phone product, should offer strong momentum throughout the year.
The December quarter will likely show US$6.4 billion in revenue and $0.79 in EPS along with 15.5 million iPods sold.
For fiscal 2007, Mr. Wu is estimating Apple will post $23 billion in revenue and $2.85 EPS. Looking forward to 2008, he predicts Apple will report $28.1 billion in revenue and $3.50 EPS. That estimate is based on 23 percent growth in Mac sales to 8.8 million units, 9 percent growth in iPod sales to 47.3 million units, and an additional $326 million in sales from cell phone products.
Mr. Wu is maintaining his "Buy" rating for Apple, and a target price of $99. Apple stock is currently trading at $85.74, up 0.90 (1.06%).
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
Wed Jan 03, 2007 9:20 pm Subject: Everyone bate your breath....
This was Shaw Wu a year ago 11-Jan-2006:
Mr. Wu also left his "Buy" rating on Apple's stock intact. In addition to setting a new target price of $101, he upped his FY06 revenue and EPS estimates to $19.4 billion and $2.00 and his FY07 revenue and EPS estimates to $22.6 billion and $2.40. "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," he wrote.
So last year was way too aggressive, this year is conservative, and his estimates are still higher?!? At least it sounds like he's deemphasizing the mythical iPhone. I'm sure by his next letter to his clients on Friday, it won't even be mentioned. At $2.85 EPS he estimates, the stock ought to be trading in the $60 - $70 range next year. Let's see who's closer a year from now
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