Analyst Ben Reitzes, who maintains a Buy rating on shares of Apple, increased his price target to $108 from $95, citing healthy sales of iPod digital music players during the early going of the holiday shopping season.
"Our checks point toward solid iPod sales for new shuffles & certain nanos along with momentum in Macs and prospects for higher accessories & software longer-term," he wrote in a note to clients.
Reitzes bumped his estimates on the Cupertino, Calif.-based company for the December quarter to $0.80 in earnings per shares on 11 percent revenue growth to $6.4 billion, up from $0.78 and $6.3 billion. He also increased his quarterly iPod unit sales forecast by approximately 1 million units to 16.56 million, but made no changes to his Mac model of 44 percent growth to 1.8 million units.
Looking ahead to fiscal 2007, the analyst said Apple's higher Mac sales may lead to better sales of software, which he estimates will grow 22 percent to $1.56 billion in revenue. He's modeling the company to earn $2.84 per share on 23 percent revenue growth to $23.76B, up from $2.75 and $23.25 billion.
"Also, we wouldnt be surprised to see Apple pull up the launch date of its new OSX Leopard in order to pre-empt Microsoft Vista," he told clients. "Another area that could benefit in [fiscal 2007] is sales of "other music & accessories" as Apple sells more movies (we believe Apple will sign-up more movie studios for iTunes beyond just Disney)."
Assuming Apple can maintain its Mac share gains and continue to reinvigorate the iPod line with video, gaming and WiFi-related features, Reitzes projects the company will earn $3.35 per share on 18 percent revenue growth to $28 billion in fiscal 2008.
"We continue to believe Apple will launch new products in calendar '07 including cell phones, iTV and even ultraportable devices," he wrote.