Following blowout first quarter results that reflected a successful holiday season for Apple Inc., RBC Capital Markets analyst Mike Abramsky raised his price target on the iPhone and iPad maker to US$425 per share from US$395.
“Lower sentiment on uncertainty over CEO Jobs’ leave and Apple’s future may restrain its valuation multiple and keep shares rangebound near-term,” he said in a research note. “However, Apple’s huge momentum and opportunity remain intact…”
The analyst told clients that its valuation remains compelling and further upside should come from catalysts such as the Verizon iPhone, iPad 2 and iPhone 5. Mr. Abramsky also cited earnings outperformance, growing confidence in management, improved visibility to sustained competitive advantage.
Apple’s revenue came in a US$26.7-billion, up 71% year-over-year, while its earnings per share (EPS) of US$6.43 beat the Street’s forecast of US$5.39. The company also exceeded consensus forecasts with its second quarter guidance of US$22-billion in revenue and US$4.90 in EPS.
Despite pending competition, Apple sees a big opportunity in tablets and boast first mover advantages. The company shipped 7.3 million iPad in the first quarter at an average sales price of US$600, well above the Street’s expectation of just 6 million of the devices. RBC estimates 28 million iPads will be shipped in the 2011 calendar year.
Meanwhile, Apple sold 16.2 million iPhones at US$625 on average and cited “huge” pent-up demand. The company shipped 4.1 million Mac computers, growing faster than the PC market for the 19th straight quarter, Mr. Abramsky noted.
His fiscal 2011 revenue and EPS estimates climb to US$99-billon from US$91-billion and to US$23.30 from US$20, respectively. The analyst’s 2012 forecasts also climb to US$118-billion and US$28 per share, respectively, in addition to US$80 per share in cash in 2011 and US$110 in 2012.
From business.financialpost.com
