UBS Optimistic on Apple Growth, Investors Overreacting

Investor reaction to lower than projected iPod sales is overblown, according to a UBS report issued Wednesday. Although iPod sales were strong at 6.45 million, investors were hoping to see at least 6.75 million, overshadowing the 48 percent growth in Mac sales.

Despite the fact that Apple is having some issues acquiring enough parts to meet the staggering demand for the iPod nano, UBS is projecting solid growth. Part of that growth is based on the expectation that Apple will announce new hard drive based iPods and new Mac models on October 12.

UBS is raising it first quarter 2006 estimates for Apple to $0.50 from $0.49 based on a 36 percent revenue growth to $4.74 billion. Fiscal year 2006 earning estimates are also up from $1.75 to $1.78 based on a 25 percent growth to $17.4 billion.

UBS also set a new target value at $65, and left its Apple stock rating unchanged at "buy."

Apple stock is currently pre-market trading at $47.82, down 3.77 (7.31%).

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