Janney Montgomery Scott Ups $AAPL Target to $745 on iPad mini

AAPLJanney Montgomery Scott analyst Bill Choi bumped his price target for shares in Apple Inc. to US$745 the expectation that Apple will use its October 23rd media event to introduce the long-awaited iPad mini. The analyst raised his estimates on December quarter iPad unit sales to 25.5 million, a net gain of 5 million units.

One of the most popular party games to play right now is guessing how much Apple will price this 7.x-inch tablet. At issue is Amazon's and Google's entry-level price of $199 for their 7-inch devices (the Kindle Fire HD and Nexus 7, respectively. On the other hand, Apple charges $299 for its iPod touch, suggesting that the iPad mini will be priced higher than that, well above the Amazon/Google price.

Mr. Choi expects the iPad mini to be priced between $300 and $400, between the iPod touch and Apple's existing iPad 2, which is priced at $399.

"We recognize that [the above-mentioned] competing products are priced starting at $199, but see Apple providing a premium product at a premium price point," the analyst told clients.

Looking to units shipped, the analyst said he expects Apple to sell 6 million of its new device during the holiday quarter. At the same time, he expects the iPad mini to cannibalize 1 million units of its larger iPad sibling, for a grand total of 25.5 million iPad sales during the quarter.

For fiscal 2013, Mr. Choi is modeling for 102 million iPad sales, including 32 million iPad mini and 70 million iPad units. That's a net increase of 19.8 million units. He is modelling for an average selling (ASP) price of $480, which is a decrease from his previous ASP of $521.

In the same research note, Mr. Choi lowered his iPhone estimates for the completed September quarter to 26 million iPhones, down from 27 million. The downward revision was based on supply constraints that he expects to improve in the next few weeks. He is modeling 50.7 million iPhones during the December quarter, way to the high end of other analysts.

Mr. Choi maintained his "Buy" rating on AAPL.

Shares of AAPL closed lower on Wednesday, ending the day at $644.614, a loss of $5.179 (-0.80 percent), on light volume of 13.9 million shares trading hands.

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