Morgan Keegan Cuts AAPL Target on Weak iPad Sales Estimates

Morgan Keegan analyst Travis McCourt thinks Apple’s December iPad sales were weaker than expected, so he’s cutting his 12-month target price for the company’s stock from US$530 down to $513.

Mr. McCourt now estimates Apple sold some 13 million iPads instead of 16 million during the December quarter, and 4.8 million Macs instead of 4.9 million. His iPhones sales estimate is up, however, at 29 million instead of 27 million.

iPad sales are down, says Travis McCourtiPad sales are down, says Travis McCourt

Somewhere between 1 million and 2 million iPad sales were lost to Amazon’s Kindle Fire, according to Mr. McCourt. He estimates Amazon sold between 4 and 5 million of its media viewing tablets during the holiday season.

Despite his lower target price, Mr. McCourt maintains a positive outlook for Apple’s stock. “We believe December will turn out to be another great quarter for Apple with share gains in Mac and iPhone product lines, and continued strong growth in iPad, although slightly slower than we originally anticipated,” he said.

He added, “Apple could create substantially more shareholder value by paying an ongoing dividend than by extending its top line growth another one to two years, as it would open up the shares to an entirely new and growing class of shareholder.”

While he suggests Apple should pay shareholder dividends, he said he has no evidence to support that the company will.

Looking forward, he expects the next iPad upgrade will help boost Apple’s bottom line in 2012, as will ongoing sales of the iPhone 4S and a fall release of the iPhone 5. He’s also on the Apple television bandwagon, and expects the company could see a significant revenue increase if it is released this fall.

Mr. McCourt lowered his December quarter EPS from $10.24 to $10.10, along with his full-year EPS from $33.76 to $33.32. He is maintaining his “Outperform” rating for Apple’s stock.

Apple is currently trading at $410.84, up 5.84 (1.44%).

[Thanks to Forbes for the heads up.]