May 25, 2011SAN FRANCISCO—An analyst raised his earnings estimate and price target forApple Inc. Wednesday, citing demand for the iPad and expectations for the release of a new iPhone by early next year.
In a client note, Wedbush analyst Scott Sutherland reiterated his "Outperform" rating for the stock and increased his price target by $5, to $450. The analyst also raised his fiscal 2011 net income estimate to $24.71 per share from $24.30 per share and revenue estimate to $103.5 billion from $102.9 billion. Sutherland said he would buy shares due to continuing demand for Apple's products and the stock's value.
Expectations for beating earnings estimates are "becoming rightfully subdued" and an all-new iPhone probably won't be launched for another six months, with a slightly updated version in the meantime, he said. Still, "we believe Apple still has enough horsepower to drive continued revenue growth" and higher earnings estimates, he said.
For the past several years, Apple has released a new iPhone during the summer, but this year it is expected to arrive later than usual. Sutherland expects a slightly improved version of the iPhone to arrive in September that includes features such as a more powerful processor. He's expecting a more overhauled version by January that can work on Verizon's and AT&T's high-speed "4G" networks and that has an improved user interface and includes access to some sort of cloud service for data access and storage.
Sutherland raised his shipment estimate for the existing iPhone to 18.6 million devices for the quarter that ends in June, up from an earlier estimate of 17.7 million devices.
The analyst raised his iPad shipment estimates too, due to high demand for the tablet computer, but said this is "tempered by supply constraints," which could be restricting growth. He expects the company will have shipped 5.5 million iPads in the quarter that ends in June, compared with an earlier estimate for just over 5 million.
