Hot on the heels of Apple’s blowout December quarter results, three analysts have issued research notes to clients, and all three have raised their price target for the company’s stock (ranging from $400 to $465 per share). Apple’s strong performance across all sectors of the company’s business and strong guidance from Apple executives was, apparently, more than enough to overshadow worry over CEO Steve Jobs’s medical leave of absence that was announced Monday.
Of Mr. Marshall
Brian Marhsall of Gleacher & Co. was the most conservative of the three analysts we’re covering, raising his target price for the stock from $355 per share to $400. He maintained his “Buy” rating.
“Clearly with AAPL shares down only approximately 2% on Tuesday post Steve Jobs’ announced medical leave,” Mr. Marshall wrote in a research note obtained by The Mac Observer,”the investment community was anticipating a blowout quarter…they certainly got it.”
Mr. Marshall highlighted two specific aspects of the company’s results as the most important, and that was higher-than expected gross margins (38.5% for the December quarter and strong guidance of 38% for the March quarter), and “robust” iPad demand.
Apple sold 7.3 million iPads during the quarter, higher than Street estimates. Mr. Marshall expects Apple to sell 30 million iPads during calendar 2011.
“In our view,” he wrote, “Apple remains the best technology company on the planet with numerous catalysts on the horizon (e.g., CDMA iPhone ramp, iPad 2, etc.) with minimal business model issues (e.g., key-man risk with Steve Jobs).”
Of Mr. Reitzes
Ben Reitzes of Barclays Capital was also very impressed with Apple’s results, noting the company beat his higher-than-Street-consensus-estimates in revenue, earnings per share, margins, and units sold.
This was enough to cause him to increase his 12-month price target from $420 per share to $450, in the middle of the range for these three analysts. He maintained his “Overweight” rating on the stock.
“This very strong quarterly report left no holes to punch in the fundamental story,” Mr. Reitzes wrote in a research note obtained by TMO. “We believe the above-consensus revenue and EPS guidance and new products to come bring potential for further upside. We continue to believe the company is in very capable hands with COO Tim Cook and the rest of the team.”
Apple’s improved outlook on gross margins and unit saes were cited as key reasons behind the higher target price, and the analyst raised his EPS estimates for the March quarter to $5.10 per share (up fro $3.92), and EPS for fiscal 2011 to $23.50 (up from $19.20).
Of Mr. Um
Maynard Um of UBS was the most aggressive of the three analysts, pushing his 12-month target on AAPL from $415 per share to $465. He maintained his “Buy” rating.
Underlying his reasoning for the increase is what he sees as strong demand around the globe for almost everything Apple does, noting that, “we see Apple’s ecosystem and ease of use as offering a more compelling value proposition than its competitors today.”
He also said that he expects Apple’s market share in the tablet space, “to more closely match its iPod market share in the mp3 player market rather than its share in the more fragmented smartphone market.”
Apple has consistently maintained 70% market share in the MP3 market, higher than either the Mac or iPhone platforms have ever been. He estimates that Apple will be able to sell 30.73 million iPads during fiscal 2011, which ends in September.
More generally, he advised clients in a research note obtained by TMO that, “What we expect could be the largest pre-order & sales ever experienced by Verizon Wireless for the iPhone, further expansion to other CDMA-based operators, continued dominance in tablet share, & continued strength from geographic expansion (Asia Pacific in particular, which grew ~65% y/y) with incremental growth opportunity from further halo effects to other Apple products, we see shares as offering compelling value.”
Shares in AAPL closed lower Wednesday, losing gains held throughout most of the day in the closing hour of trade. The stock closed at $338.84, down $1.81 (-0.53%), on heavy volume of 40.5 million shares trading hands. Today’s loss came amidst a general downturn in the broader markets.
*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.