Sterne Agee: Strong iPhone 5 Numbers Should Quell $AAPL Concerns

The Apple Crystal BallStrong numbers for iPhone 5 sales this weekend in China should quell investor concerns about shares of Apple Inc., according to Sterne Agee analyst Shaw Wu. In a research note to clients on Monday, Mr. Wu said that he expects Apple to sell 47.5 million iPhones in the December quarter, a number that's above consensus estimates of 45-46 million units.

Mr. Wu noted that concerns arose last week on reports that there were no lines of people awaiting the iPhone 5 when the device launched in China on Friday. This contrasted with the launch of the iPhone 4 and 4S, where riots broke out amidst rowdy lines of would-be profiteers.

"We believe these concerns are misplaced in that AAPL China implemented a new policy where a reservation is required to pick up new devices like the iPhone 5," Mr. Wu wrote. "This was implemented to deliver a better customer experience and in response to near-riots in previous years due to new product launches like the iPhone 4S, iPhone 4, and iPad mini."

He added, "We continue to believe iPhone 5 is a significant update positioned to drive a powerful product cycle."

Apple announced on Sunday that it sold some 2 million iPhones during the first three days of availability for the new device in that country. In addition, pre-orders for the device at China Unicom were up 50 percent to 300,000 units.

In addition to his bullish iPhone 5 sales forecast, the analyst said that he modeling gross margins of 38.7 percent, "due to improving yields and a mix shift towards iPhone." That's higher than Apple's guidance of 36 percent.

He left his iPad estimates in place at 23.5 million units, in the middle of consensus estimates of 23-24 million units. His Mac estimates of 5 million units are slightly below consensus of 5.2-5.3 million units

The analyst maintained his US$840 price target for $AAPL, as well as his "Buy" recommendation for the stock.

In the mid-afternoon session, $AAPL was trading higher at $512.95, a gain of $3.156 (+0.62 percent), on moderately strong 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.