Apple’s iPhone, iPod touch and iPad have already proven to be popular with consumers and strong market leaders in 2010, and Canccord Genuity analyst Michael Walkley expects that the company will maintain that lead in 2011.
“Based on continued strong sell-through trends for the iPad and iPhone, we believe Apple will maintain both market and value share leadership in these fast growing markets through C2012,” Mr. Walkley said. “In fact, our monthly channel checks indicated continued strong sales of the iPhone 4, as it remained by far the top selling smartphone at AT&T despite the new Windows 7 smartphones and a reduction in BlackBerry Torch prices from $199 to $99.”
Mr. Walkley expects Apple will introduce a version of the iPhone that’s compatible with Verizon’s CDMA-based cell network in February 2011, which will help keep the combination iPod and smartphone ahead of competing products. “We anticipate strong iPhone sales at Verizon during H1/C2011 could slow Android momentum,” he added.
Mr. Walkley also has high expectations for the iPad. Based on his supply channel checks, iPad supply and distribution has been improving, and he expects Apple is on track to sell some 6.3 million units during the last calendar quarter of 2010.
“We believe Apple has set the standard for the tablet market, and webelieve its aggressive pricing will make it tough for competitors to compete longer-term,” Mr. Walkely said. “In fact, given Apple’s strong ecosystem of applications and leading tablet form factor, we believe competing tablet products will need to sell at a substantial discount of roughly $200 to effectively compete with Apple.”
Selling tablets for such a low price would put a strain on manufacturers hoping to turn a profit, and most likely wouldn’t be sustainable.
Mr. Walkley is maintaining his “Buy” rating and $421 target price for Apple’s stock. He is, however, raising his fiscal 2011 EPS from $18.33 up to $18.84, and moving up from $21.06 to $21.61 in fiscal 2012.
Apple is currently trading at $317.75, up 1.35 (0.43%).