AmTech Raises Apple Target Price on iPhone Prospects

American Technology Research analyst Shaw Wu raised his AAPL target price from US$118 to $145 based the iPhoneis potential to add significantly to Appleis bottom line. He is also adding Apple to AmTechis Focus list.

Mr. Wuis research indicates that AT&T, the sole carrier of the iPhone in the United States, is considering rebates or subsidies between $50 and $150 for iPhone subscriptions to entice buyers into two-year plans. He commented "From AT&Tis;perspective, a rebate is a great marketing tool to entice a customer to sign up for 2-year voice and data plans that cost $75-100 per month, meaning $1800-2400 in iguaranteedi bi-annual revenue."

Apple is also likely to get a "bounty" for each iPhone subscription sold through its own retail stores. It may also participate in a revenue sharing scheme with AT&T and collect a recurring monthly fee. "We believe this recurring revenue stream is high quality," he said, "and adds an additional degree of stability and predictability to Appleis financial results."

The most likely European iPhone carrier, according to Mr. Wu, will be Vodaphone. Based on the carrieris 200 million subscribers, as opposed to AT&Tis;61 million subscribers, a Vodaphone deal could potentially net Apple a substantial sum.

Mr. Wu is raising his fiscal 2008 revenue model from $28.2 billion and $3.75 EPS to $31.1 billion and $4.15 EPS based on 3.45 million iPhones sold. He is maintaining his "Buy" rating with the higher $145 target price. Apple is currently trading at $89.89, down 1.53 (1.67%).

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