Apple’s new iPhone OS is compelling, and it should spur new sales of iPhones and iPod touches once it ships, according to Barclays Capital analyst Ben Reitzes. Based on higher-than-expected sales of iPhones during the March quarter and higher estimates in the coming quarter, Mr. Reitzes raised estimates for Apple through fiscal 2011, and raised his price target to $300 for the stock.
For fiscal 2010, Mr. Reitzes is estimating earnings per share (EPS) of $12.30, up from $12.00, with revenue of $57.7 billion, up from $56 billion. For 2011 he raised EPS estimates to $14.40 up from $13.75, on revenue of $67.4 billion, up from $64.5 billion.
iPhones and iPads are the driving force behind the estimate increases, and Mr. Reitzes said that his estimate of 1.2 million iPads during the June quarter may well prove conservative. Apple sold 450,000 of the devices in less than a week.
iPhone OS 4 is going to boost sales of iPhones, according to the analyst. He wrote, “We believe software is Apple’s ‘Secret Sauce’ that competitors simply cannot match. Apple’s pace of innovation and quality of product have left everyone else far behind, in our view, and point toward further share gains for the company.”
He added, “While many of [the new features in iPhone OS 4] are significant upgrades that will likely get users excited for the next generation iPhone, some of the features will not be available to older 3G & 2G iPhones and the 2nd generation iPod Touch and earlier models, which could fuel even more demand for upgrades.”
Mr. Reitzes raised his price target on the stock from $280 per share to $300 per share, noting, “We continue to believe that Apple deserves a higher multiple relative to both the group and the market given it is one of the best growth stories in IT hardware over the long term.”
AAPL closed Friday in the black, at $241.79 per share, a gain of $1.84 (+0.77%), on light volume of 11.9 million shares trading hands.
*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.