Wall Street Sees Apple’s New iPad Continuing to Dominate Tablets

| Apple Stock Watch

Wall Street is bullish on Apple’s new iPad, which was announced on Wednesday at a media event in San Francisco. Sterne Agee, Barclays Capital, and Canaccord Genuity all issued research notes on the new device, and all three firms believe the new iPad will allow Apple to continue its domination of the tablet market.

Apple's Big Pile o' Money

Shaw Wu of Sterne Agee told his clients that the inclusion of 4G LTE support is the most important feature of the new iPad. He said that the higher speed will be welcome to consumers and noted that it’s the first Apple device to support the new wireless standard. He believes this reinforces the idea that the next iPhone will support the technology, as well.

He added, “Unlike competitors, [Apple] is delivering strong battery life (9 hours using 4G LTE and 10 hours on 3G). We do not believe this can be easily replicated as AAPL is unique in the industry with its core ownership of key intellectual property including battery chemistry, systems design, and software.”

Mr. Wu maintained his “Buy” rating on the stock and reiterated his $620 price target.

T. Michael Walkley of Canaccord Genuity said that the device “raised the bar relative to competing tablets with impressive hardware specifications, competitive pricing, and the leading software ecosystem that includes over 200k iPad-specific applications.”

He wrote that the pricing of the new device (starting at $499), coupled with reduced pricing on the iPad 2 (now priced at $399), positions Apple to maintain its dominant market share position in the tablet market the original iPad created.

“We were impressed with both the features and pricing of the new iPad relative to competing tablet offerings announced at CES and MWC,” the analyst wrote. “We believe consumers will overwhelmingly choose the new iPad and iPad2 versus other tablets given these competitive price points and relative value the Apple ecosystem provides to tablet users versus the less mature tablet ecosystems.”

Mr. Walkley maintained his “Buy” rating on the stock and his $665 price target.

Barclays Capital analyst Ben Reitzes also focused on the important of LTE support in the new device, and he called Apple’s ability to offer up to ten hours of battery life on the device (nine hours with 4G enabled) “an important engineering feat.”

“Even with 4G-LTE capability the new iPad has the same 10 hour battery life as the iPad 2, which is an important engineering feat – and likely something that will be tough for competitors to replicate,” the analyst wrote.

He also told clients that the key to Apple’s success with the iPad lies not in its specs, but rather in the company’s ecosystem. He believes that Apple’s customers understand the value proposition of Apple’s whole widget business model, and that this is what allows Apple to dominate the tablet market.

“While today many will focus on features of the new iPad vs. expectations, we believe that Apple’s software ecosystem is the key driver of sales of iOS devices,” Mr. Reitzes wrote. “Like the iPhone in smartphones, the iPad is the most usable tablet in terms of software, apps and access to the cloud.”

He added, “We believe consumers understand this value proposition, which helped propel iPhone 4S to record levels last quarter. As a result, we believe that [Wednesday’s] announcement continues this trend – as Apple’s value proposition could bring upside to ASPs and unit sales throughout the year. The new features of the iPad clearly raise the bar even higher for competitors and the lower priced iPad 2 could keep competitors at bay.”

Mr. Reitzes maintained his “Buy” rating and a $665 price target.

Shares of AAPL rose Thursday to end the day at $541.99 per share, a gain of $11.30 (+2.13%), on light volume of 18.3 million shares trading hands. The company’s market cap is once again above a half a trillion dollars, at $505.3 billion.

*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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