Barclays Capital analyst Ben Reitzes has raised his price target for shares in Apple Inc. to $260 per share based on expectations for Mac, iPhone, and Apple's as-yet unannounced tablet product for 2010. In a research note to clients obtained by The Mac Observer, Mr. Reitzes also raised earnings estimates for both fiscal 2010 and 2011.
"We are raising our estimates and target for Apple to reflect continued momentum in Macs and iPhones and related sales," Mr. Reitzes wrote. "We believe [the December holiday quarter] was strong for Apple with holiday demand, and the company is positioned to benefit in [fiscal 2010] from a new tablet product, a major new (redesigned) iPhone product cycle and share gains in Macs."
Mr. Reitzes believes that Mac and iPhone sales alike are actually gaining momentum, even though both platforms saw record quarters in unit sales for most of 2009. this opinion was based on checks in Apple's retail stores, with Apple's retail partners, and in the supply chain.
"In particular," he wrote, "we believe Macs may be able to deliver upside for the next few quarters into education buying season and with help from an enhanced halo effect from the iPhone."
As for the iPhone, Mr. Reitzes said that sales momentum is building in Apple's international markets - Apple's strongest market for this device has so far been the U.S. Sales outside that market will represent growth for the company.
The tablet also figured into his increase in estimates, as he believes Apple could quickly sell a million units of this new device once it ships. Each million units the company sells would add $0.15 in Apple's annual EPS.
For fiscal 2010, the analyst raised estimates from $7.55 to $7.84, a 25% increase. His fiscal 2011 estimates went from $8.90 to $9.45, a 21% increase. The new price target of $260 is up from $235. He maintained an "Overweight" rating for the stocks, which means he believes AAPL will outperform the sector as a whole.
The stock closed lower at $210.58 per share, a loss of $0.39 (-0.18%), on moderate volume of 16.94 million shares trading hands.