Canaccord Raises AAPL Target on Strong iPhone, iPad Sales

Canaccord Genuity analyst Michael Walkley raised his 12-month target price for Apple’s stock on Thursday from US$710 up to $740 based on strong iPhone sales and the successful launch of the third generation iPad. Those sales should lead to strong second quarter figures when Apple hosts its quarterly conference call for analysts next week.

“We maintain our belief Apple is well positioned for strong sales and earnings growth driven by new product introductions across its portfolio,” Mr. Walkley said.

iPhone sales drive Canaccord's AAPL target upiPhone sales drive Canaccord’s AAPL target up

Despite his expectation that Apple will report strong numbers, Mr. Walkley expects to see lower iPhone sales figures in the short term.

“Our recent channel checks indicate modestly slowing iPhone 4S sell-through trends in developed markets,” he said. “We have lowered near-term iPhone unit estimates, but we have increased our fiscal 2013 iPhone estimates as we anticipate very strong demand for an LTE iPhone 5 ramping during the December quarter.”

Mr. Walkley is anticipating Apple will see strong demand for an LTE-based iPhone in the December quarter, which would fall inline with the company’s iPhone 4S launch schedule from last year. Despite the potential for a fall iPhone refresh, he also expects Apple could release a TD-SCDMA/TD LTE version of the iPhone during the March 2013 quarter for the Chinese market. If so, Apple’s next generation iPhone would potentially be available to a substantially larger market than previous iterations.

His EPS estimate for fiscal 2012 is down from $44.58 to $43.13 on lower expected iPhone sales. The fiscal 2013 EPS estimate, however, is up from $50.68 to $52.79.

Mr. Walkley is maintaining his “Buy” rating for Apple’s stock while upping his target price to $740. Apple is currently trading at $601.00, down 7.34 (1.21%).