Thursday, September 07, 2006

Calls of Note Part 3

Couple of tier-1 firms have positive comments on Apple (NASDAQ:AAPL):

* Goldman Sachs notes Apple's September 12th special event should refocus consumer attention on iPods heading into the holiday shopping season. While Macs are likely to be the standout category again in the September quarter driven by strong consumer and education notebook sales, new flash-based iPods should drive a sharp uptick in the seasonally stronger December quarter. The combination of new iPods, more aggressively priced Intel-based Macs, and still-to-come products like iPhone and a digital hub give the firm greater confidence that the bias to estimates has now shifted firmly to the upside.

With the next move in Apple's earnings estimates likely to be higher, driven by the ramp of new products, firm's current target price of $77 also has an upward bias. They would continue to be opportunistic buyers of the stock through the seasonally stronger back half
of the year.

* UBS thinks that next Tuesday Apple will unveil a major move into the digital home with the potential to multiply its revenue streams. Firm believes its evolving ecosystem can lead to higher sales of Macs given OS X's unique ability to bridge the digital divide in conjunction with iTunes. Near-term, checks show Mac sales may have upside & the firm believes momentum can continue.

To reflect higher sales of Macs,4Q06 estimate is $0.50 (was $0.49) based on 26% y/y revenue growth to $4.65B (was $4.63B). Firm is also raising FY07 estimate to $2.70 (was $2.65), now based on 25% revenue growth to $23.9B (was $23.7B) helped by a mix shift toward higher margin Macs. They are initiating an FY08 estimate of $3.10 based on 15% revenue growth to $27.43B.

In addition to potential new nanos & movie/video services, the firm is excited about potential products through 2007 such as portable media players & a cell phone (phone is not yet in their model). Tgt goes to $92 from $80. Maintains Buy.

Notablecalls: Think AAPL stock may move higher over the next couple of days. May not happen today as it made a pretty sharp move on Tuesday.

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