Analyst: Apple Has Moved Beyond U.S.-Centric Story

| Apple Stock Watch

AppleApple’s March quarter results show that the company has progressed beyond being a U.S.-centric story, according to Sterne Agee analyst Shaw Wu. In a research note, Mr. Wu told clients that Apple has become an international story, and the analyst raised his price target on AAPL to US$780 per share, up from $750.

On Tuesday, Apple reported revenue of $39.2 billion and earnings per share (EPS) of $12.30, both of which were above Wall Street expectations. Consensus estimates had expected $36.8 billion in revenue and EPS of $10.04.

“[Apple] reported an impressive March quarter fueled by a big iPhone upside,” the analyst wrote. “This was surprising in light of relatively weak activations at [Verizon] and AT&T. But there are 230 global carriers, and in our view this simply means that AAPL has moved beyond a U.S. centric story to more of an international one, focused on growth markets like Greater China.”

For the June quarter, Apple guided for $34 billion in revenue and EPS of $8.68. Mr. Wu labeled the guidance as a “vintage conservative” move by Apple, in that the company has for many years guided consistently well below what it eventually reports.

“While we found this conservatism surprising in light of China Telecom recently launching in March as a new carrier,” wrote Mr. Wu, “we believe AAPL is being prudent in setting realistic expectations.”

He also said that Apple was being smart in drawing down expectations for iPhone sales in the June quarter, as many people might begin waiting for the next iPhone upgrade at that time.

In light of that, Mr. Wu reduced his revenue projections for Apple for fiscal 2012 to $158.1 billion, down from $160.1 billion. At the same time, he raised his EPS projections from $44.75 to $46 due to what he believes will be favorable component pricing for the company throughout the year.

Similarly, he lowered fiscal 2013 estimates from $187.3 billion to $187.2 billion—a slight decrease—while raising his EPS estimates from $52 to $53.

The increased EPS estimates come with an increased price target of $780, up from $750, based on an 11.8X multiplier on calendar 2013 estimates of $56.13 in EPS plus $117 billion in net cash.

Apple’s stock jumped on Wednesday after Tuesday’s earnings report, reversing several days of losses. In the early afternoon session, AAPL was trading at $611.50, up $51.22 (+9.14 percent), on moderate volume.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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1 Comments

Lancashire-Witch

International story!  Apple’s iPhone revenue may well be international, but in terms of support,  focus and features across the product range it’s a different story.

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