Monday, October 22, 2012

Apple Inc. (NASDAQ:AAPL): Sterne Agee Boosts Estimates Ahead of Earnings This Week

Apple Inc.(NASDAQ:AAPL) analysts of the Street’s are altering their estimates ahead of the predicted iPad Mini launch tomorrow and September quarter warnings.

Shaw Wu, an analyst at Sterne Agee has written in a research note that he is expecting a modest revenue and EPS beat for the fiscal fourth quarter, but with classic conservative guidance for the December quarter.
Wu is of the opinion that iPhone units will come in before the consensus estimate of 25-26 million units. He is expecting 27 million. He said that investors have gotten overly negative with demand and near-term module problems. Wu said that his supply chain checks have indicated that demand is still robust even though there have been concerns with Maps. He feels production capacity has improved owing to better yields on in-cell tough screens.

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On the flip side, Wu thinks that the consensus estimate on iPad sales at 17-18 million units is pretty high. He expects 16.5 million. He said the supplier checks have revealed that build plans are lower before iPad mini and might be a minor revamping of the new iPad with an 8 pin Lighting connector. WQ thinks his old December quarter prediction regarding iPad of 22.3 million units was too low. He has moved that figure to 25.5 million. He said that the consensus is 24-26 million.

As for the Mac, his prediction is 4.8 million units. The upper end of the Street consensus range has helped its June 2012 MacBook Air and MacBook tweaks.

Wu takes note that he is below the consensus on gross margin. He is measuring 40.5-41.5% vs. the Street’s 42%-43%. In his opinion, there two problems on margins – iPhone 5 manufacturing yields and lower margins on the iPad mini. At least, the first one is true.

For the September quarter, Wu increases his gross margin forecast to 40.5% from 40%. That has inched up his EPS forecast to $8.93 for each share from $8.79. For FY 2012, he has gone up to $44.39 for each share. For FY 2013, his prediction ups to $52.

Shares of AAPL are up 1.75% to $619.80 in the opening session.

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