First Albany, J.P. Morgan Up Estimates & Targets on Apple

J.P. Morgan Securities and First Albany increased their revenue and earnings estimates on Apple Computer (AAPL) Monday, saying strong demand for its iPod portable media player and G5 iMacs will make the difference in fiscal 2005.

Although optimistic Apple will sell its products well this holiday season, JP Morgan analyst Daniel Kunstler, wrote clients Monday, "while we believe concerns over Appleis valuation are certainly understandable given the stockis rapid rise, we believe expectations for the companyis revenue and profit growth may still prove conservative."

In fiscal 2005, Mr. Kunstler now expects revenue of US$12.92 billion and earnings per share at $1.69, up from its prior forecast at $11.4 billion and earnings of $1.48 a share.

On November 16, Mr. Kunstler commented on Apple saying, "the success of Appleis digital music initiatives has been established, but its sustainability is still a hotly debated topic...We believe the potential profitability of Appleis music business is highly dependent on whether or not the company can maintain its dominance in the portable music player market and avoid profit compression from commoditization."

Analyst Joel Wagonfeld at First Albany maintained his "buy" rating on Apple Monday, while raising estimates for the company. The target price has been raised from $61 to $72.

In a research note, Mr. Wagonfeld said robust demand for and improved availability of iPods and G5 iMacs products are likely to boost the company?s performance in the near future. The analysts consider the recent weakness in Appleis share price "an attractive investment opportunity." The EPS estimates for the first quarter of 2005, fiscal year 2005 and fiscal year 2006 have been raised from $0.42 to $0.47, from $1.35 to $1.57 and from $1.65 to $1.87, respectively.