JP Morgan Reiterates "Overweight" Rating on Apple, Raises Estimates is reporting that Wall Street firm JP Morgan has reiterated its "Overweight" rating for Apple, largely based on Appleis success in the digital music market. The firm also raised estimates for fiscal 2005 by 20 cents to US$1.48 per share, and for fiscal 2006 by 38 cents per share to $1.91.

An Overweight rating means that JP Morganis analyst believes that Appleis "total return is expected to exceed the average total return of the analystis industry (or industry teamis) coverage universe, on a risk-adjusted basis, over the next 12-18 months."

JP Morgan also cautions that Appleis success in this field is dependent on its ability to keep would-be copy cats or taggers-on from forcing Appleis prices down. Forbes reports that the analyst report said the following: "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."

Unlike some other industry pundits and analysts, however, JP Morgan is also saying that Appleis closed iPod and iTunes Music Store (iTMS) approach will help the company avoid the "profit compression" mentioned above.

In contrast, Apple has received no small amount of criticism for keeping the iPod and iTMS closed. Most of those espousing this position assert that Apple can only maintain its dominance by licensing out the iTMSis DRM scheme, FairPlay to third party manufacturers and music download services.

JP Morganis comments are an endorsement of Appleis approach to the market.

As of this writing, AAPL is trading at 54.90, down 0.34 (-0.62%), on moderate volume.

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