UBS Maintains Buy on AAPL; Lowers FY07 Estimates, Raises FY08

UBS analyst Ben Reitzes is maintaining his Buy rating on AAPL after the company announced Wednesday that the iPhone is scheduled to ship on-time in June, but that Mac OS X 10.5 "Leopard" would be delayed until October due to resources shifted from Mac OS X to iPhone. The firm lowered Mac unit sales and revenue estimates for fiscal 2007, and raised those same estimates for fiscal 2008.

UBS sees the confirmation of iPhoneis June target as a bigger plus for Appleis financials than the hit the company will take on Mac sales as people await the release of Leopard.

"While we view the delay of Leopard as a bit of a setback for Apple," wrote Mr. Reitzes in a research note, "we believe news that the iPhone is on track to ship in June is a positive as there have been some recent concerns of delays or push outs in build plans for the revolutionary device."

He added, "We continue to view the iPhone as a significant opportunity for Apple and while initial unit shipment volumes may be small (we estimate 250,000 in fiscal 3Q07) ? we believe units could reach 2.7 million by fiscal 4Q08."

The firm lowered Appleis Mac unit sales "slightly," and lowered earnings per share (EPS) estimates for fiscal 2007 from US3.26 to $3.20. EPS estimates for fiscal 2008 were raised from $3.85 to $3.90.

UBS is maintaining both the Buy rating on AAPL and a $124 per share price target. Apple is trading lower in Friday morning trading at 90.77, down 1.42 (-1.54%).

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article. ?

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