UBS analyst Ben Reitzes on Thursday also issued a research report in which he said that he remained confident in Appleis financial prognosis for the year. He kept his 12-month price target at US$100 and retained his "Buy 2" rating on the stock. In addition, the analyst increased his FY06 EPS estimate from $2.24 to $2.33, "to reflect equity compensation of about $0.12, partially offset by higher gross margins," while he lowered his FY07 EPS estimate from $2.80 to $2.75 "to reflect [the expensing of stock] options offset by higher margins and still based on 20% y/y revenue growth."
"While Apple issued conservative guidance & acknowledged a pause ahead of the Mac transition over to Intel, we continue to believe that pent-up demand should create an opportunity throughout the year," he wrote. "Also we expect Apple to introduce new products over 2006 including new iPods, a Media hub and even cell phones into FY07."
As Piper Jaffray analyst Gene Munster said in his latest research report, Mr. Reitzes noted that Appleis shares have experienced a drop in price. "In the past, we believe Appleis shares have presented buying opportunities when its sales are constrained, with pent-up demand for new products," he wrote. "We urge investors to look back at similar situations in very recent history like the iPod nano phenomenon last quarter, the iPod mini situation in mid-FY04 and the flat panel iMacs shortage in fiscal 1Q05."
Looking at what Apple may announce this year, the analyst said: "We continue to believe that Apple may expand its "digital hub" offerings to attempt to become even a bigger part of the digital home with possible new product introductions that may include iDVR-likei functionalities and a new movie download service. We believe Apple could introduce more innovations around media hubs (and related services) that act as storage units for music, movies, photos and/or other types of home entertainment--in the near future."
At 1:41 PM EST on Thursday, Apple shares were selling for $80.32, down 2.63% for the day. That was an improvement over earlier in the day, when the stock had fallen below the $80 mark.