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Apple seen beating estimates across the board

post #1 of 7
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Apple, which reports earnings for its fiscal first quarter later today, is likely to beat consensus estimates for both earnings and product shipments, according to one Wall Street analyst.

"Based on our checks with 20 Apple specialist stores and our analysis of NPD data, we continue to believe Apple will report slight upside to both Mac and iPod unit estimates and overall consensus earnings-per-share and revenue," PiperJaffray analyst Gene Munster wrote in a note to clients Wednesday.

On average, analysts are expecting the Cupertino-based company to report earnings of $0.78 per share on revenue of $6.24 billion, based on sales of 1.75 million Macs and 15.75 million iPod digital music players.

Looking ahead to Apple's fiscal second quarter, Munster noted the company has "made a habit out of guiding conservatively," typically guiding at or slightly below Street consensus for each successive fiscal quarter. Similarly, he said, the company has routinely beat its conservative guidance.

"Specifically, over the last seven quarters, Apple reported revenue above the mid-point of its revenue guidance range in each quarter," the analyst wrote. "On average, the company beats the mid-point of its revenue guidance range by 8 percent."

For the fiscal second quarter ending March, the analyst expects Apple will guide primarily in-line with Street earnings and revenue consensus of $0.60 per share on revenue of $5.22 billion.

"If March quarter guidance is at or slightly below Street estimates, we believe investors will gloss over this information and assume the company is continuing its conservative trend," he wrote.

Munster maintained an Outperform rating on shares of Apple with a price target of $99.

"We continue to believe Apple has multiple growth drivers in [calendar year 2007] and beyond," he wrote. "Near-term drivers include continued Mac market share gains, new operating system release, and AppleTV."

Long-term drivers, he said, include iPhone, increasing iTunes content library, and other "currently unknown Apple innovations."
post #2 of 7
Quote:
Originally Posted by AppleInsider View Post


Long-term drivers ....... and other "currently unknown Apple innovations."

you think?
post #3 of 7
Does it seem ridiculous to anyone else that they maintain an "outperform" rating with a price target that's only about 3% above the current stock trading price? 3% on a 1 year investment is not at all what I would consider "outperforming".
post #4 of 7
Quote:
Originally Posted by AppleInsider View Post

Apple, which reports earnings for its fiscal first quarter later today, is likely to beat consensus estimates for both earnings and product shipments, according to one Wall Street analyst.

The 100 calls went nuts yesterday, suggesting that the stock will break that level.

From my checks, AAPL will report monstrous Macbook numbers and absolutely ridiculous iPod shipments - but the stock has come so far in such a short time, I would almost expect a sell-the-news reaction.

Thanks to the iPhone though, there is a floor under the share price at least.

Should be a wild ride starting at 430....
post #5 of 7
Quote:
Originally Posted by bdj21ya View Post

Does it seem ridiculous to anyone else that they maintain an "outperform" rating with a price target that's only about 3% above the current stock trading price? 3% on a 1 year investment is not at all what I would consider "outperforming".

I think they mean "outperforming" the rest (or some subset) of the market.
So, if they expect the rest of the market to be down 10%, being up 3% would
be outperformance. (Plus they will probably update their target price if AAPL
blows away earnings expectations, as they seem to predict.)
post #6 of 7
Expect AAPL to plummet soon...

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
post #7 of 7
Quote:
Originally Posted by bdj21ya View Post

Does it seem ridiculous to anyone else that they maintain an "outperform" rating with a price target that's only about 3% above the current stock trading price? 3% on a 1 year investment is not at all what I would consider "outperforming".

They aren't guiding by popularity. They look at what the stock should be WORTH. This is a result of sales, gross and net profits, plus whatever P/E they are thinking is appropriate. The number falls out of that.

If the stock rises, or falls, despite that, it's going to change the P/E. The P/E for the industry is about 18. Apple's is about twice that. Many financial people would put Apple's fair price at about $50 because of that. But Apple's P/E is always high, at least when it's doing well. They allow for that float. It's there because Apple has high expectations going for it. They may, or may not, pan out.

Remember last year when Apple was riding high at about $86? What happened? The bubble was burst for several reasons.

But they don't predict the stock price by thinking, "Oh gee, it's 96 now, it's gotta go to at least, what, $120 by next year?"

The estimates will shortly change after Apple gives its financials today.
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