Analyst: Faster iPhone 5 Shipping Isn’t Weaker Demand

| Apple Stock Watch

Apple has been improving ship times for iPhone 5 orders with the company's website showing delivery in 2-4 days instead of weeks. That's due to improved parts availability instead of declining interest in the company's latest smartphone model, and could lead to more than 46 million phones sold during the December quarter, according to Sterne Agee analyst Shaw Wu.

Improved iPhone 5 ship times are a parts thing, not weaker demandImproved iPhone 5 ship times are a parts thing, not weaker demand

"From our latest supplier checks, we continue to pick up improving yields and availability on iPhone 5 and thus improving profitability," Mr. Wu said. "In addition, we have noticed much better availability in AAPL's retail stores, online store, as well as third-party partners. Triangulating data points, we believe there is likely upside to what looked liked aggressive consensus iPhone expectations of 45-46 million units for the December quarter."

Mr. Wu is now predicting Apple could report selling 47.3 million iPhones during the December quarter, and he raised his quarterly gross margin estimate from 38 percent up to 38.5 percent based on better iPhone 5 availability. He expects Apple will sell 25 million iPads during the quarter, and will sell 5 million Macs -- down slightly from his earlier prediction of 5.1 million.

"iPad mini demand appears stronger than expected and our supplier checks indicate that that is the key reason why lead times remain at two weeks. On the other hand, we believe Macs could come in light due to late availability of the new iMac due to manufacturing yields, as well as some minor cannibalization from iPad and iPad mini," he said.

Those numbers have Mr. Wu raising his revenue estimate from $53.7 billion up to $54.6 billion and his EPS expectation is up to $13.70 from $13.15, both of which are above the market consensus of $54.4 billion and $13.30 EPS.

Mr. Wu is maintaining his "Buy" rating and $840 target price for Apple's stock. Apple is currently trading at $573.26, down 12.93 (2.21%).

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