UBS analyst Maynard Um bumped his price target and estimates for shares in Apple Inc. Wednesday following Apple’s March quarter earnings report. which was released Tuesday.
In a research note to clients obtained by The Mac Observer, Mr. Um called Apple’s gross margin guidance for the June quarter “conservative,” and raised his price target to US$315, up from $280. The new price target represents a 19x multiplier on his 2010 estimates (see below), plus the roughly $60 per share in cash holdings Apple has.
He raised revenue estimates for fiscal 2010 to $57.5 billion, up from $54 billion and his profit estimates to $13.22 per share (EPS). He raised fiscal 2011 estimates to $61.7 billion, up from $59.8 billion, and his estimated EPS to $14.36, up from $13.45.
As for Apple’s guidance for 36% gross margins in the June quarter, down from 41.7% in March, Mr. Um is having having none of it, calling it, “overly conservative.”
“Based on our margin build up,” he wrote, “guidance appears too conservative as it, in our opinion, implies material margin degradation (500 basis points [or five percentage points]) in Macs and iPhones. We believe guidance sets up for another material beat/raise & expect continued momentum from a September iPhone ramp, Back-to-School, and then [the holiday shopping season].”
Shares in AAPL closed sharply higher Wednesday, at $259.22 per share, a gain of $14.63 (+5.98%), on heavy volume of 34.8 million shares trading hands.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.