Kaufman Bros ups Apple target on expectations of "blowout" Q1

Posted:
in General Discussion edited January 2014
Strength in all of Apple's core business segments during the December quarter is likely to see the company breeze past already heightened expectations on Wall Street, investment bank Kaufman Bros. said Wednesday.



"Despite continued difficult macroeconomic conditions and ever rising investor expectations, we anticipate Apple could still post material upside to recently raised consensus estimates, not to mention its conservative guidance, driven by strength in all three major product lines, particularly its iPhone business," analyst Shaw Wu wrote in a note to clients.



More specifically, Wu said Apple could ship a record high 9.5 million iPhones during the three-month period ending December, given information from his sources that indicate strong momentum in the U.S., a more material contribution from Asia-Pacific (China and Korea); and a stronger-than-expected uptake in Europe due to multiple carriers and more attractive prepaid service plans.



That would put Apple close to Research in Motion, which moved 10.1 million BlackBerries during its recently-ended November quarter, and best its own quarterly sales record of 7.4 million units, which was set last quarter. On average, Wall Street is expecting the Cupertino-based company to report sales of 8.8 million units, while some individual analysts have made predictions as high as 11 million units.



Meanwhile, Wu also sees continued momentum in Apple's Mac business, driven by new widescreen iMacs and MacBooks. However, he took pause in his note to clients to express concern that supply constraints on LED flat panel displays could limit upside potential, as Apple has been unable to fill all of its pre-holiday orders, particularly 27-inch iMacs.



"We are leaving our forecast at 2.9 million Macs (consensus at 2.85 million). For iPods, we remain comfortable with our aggressive forecast of 22 million units (consensus at 20 million)," he wrote. "Our sources indicate continued iPod touch momentum driven by the iTunes App Store and strong uptake in its new iPod nano with built-in video camera."



Wu reiterated his Buy rating on shares of Apple, raising his price target to $253 from $235. For the December quarter, he's forecasting Apple to earn $2.15 per share on sales of $12.4 billion, compared to management's guidance of $1.70-$1.78 per share on sales of $11.3 billion-$11.6 billion. As a whole, Wall Street is at $2.04 per share on sales of $11.9 billion.
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Comments

  • Reply 1 of 32
    The hype machine is working. This tablet better cure a disease.
  • Reply 2 of 32
    Quote:
    Originally Posted by AppleBiter View Post


    The hype machine is working. This tablet better cure a disease.



    The disease is called "analystitosis".
  • Reply 3 of 32
    Quote:
    Originally Posted by AppleBiter View Post


    The hype machine is working. This tablet better cure a disease.



    Eh, the tablet will have a hard row to hoe, a success launch might lead to sales of what ... 1.5 - 3 million units in the first year? Sure, everyone is curious about it, but I haven't seen much hype about land office sales like the iPhone had.



    That said, Apples ongoing success hinges on continued uptake of Apples existing line-up of products and continued updates to them.
  • Reply 4 of 32
    solipsismsolipsism Posts: 25,726member
    That is 220k short of my 3.12M Macs to be sold this quarter. I?m still hopeful.





    Quote:
    Originally Posted by SpamSandwich View Post


    The disease is called "analystitosis".



    Also referred to as Wu?s Disease?
  • Reply 5 of 32
    richlrichl Posts: 2,213member
    Well, iPod touch sales are at least looking rather spectacular: http://www.macobserver.com/tmo/artic...1000_xmas_day/
  • Reply 6 of 32
    lkrupplkrupp Posts: 10,557member
    Quote:
    Originally Posted by battiato1981 View Post


    Sure, everyone is curious about it, but I haven't seen much hype about land office sales like the iPhone had.



    Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.
  • Reply 7 of 32
    Quote:
    Originally Posted by lkrupp View Post


    Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.



    I'm certainly not talking about betting against it, au contraire ... my comment was in response to the initial comment by SpamSam implying that the Tablet would need to cure cancer or something to live up to the hype (...and succeed?).



    When Jobs introduced the iPhone he set the hurdle of of 10 million units in the first year. Should be interesting to see if he, or whoever introduces it, makes any sort of prediction at all about sales targets.



    Haven't seen much along these lines yet, but there was a bit of speculation a while back about some sort of subsidized plan for this thing ... Could a ragged consortium of print and video content providers provide something similar for a bundled package of enhanced content for the device?



    Currently I the only paper I pay for is the Sunday NYT (here in Seattle). No cable, have never bothered with that. I do have some renewing passes on iTunes (Daily Show and my wife loves her Desperate Housewives, etc). Give me a choice of bundled packages on iTunes with my choice of options that includes new print media (ala the Sports Illustrated demo reel) and this could end up being a lot cheaper initial outlay for buyers, sharply increasing sales. Bring a $750 device down to $400 and while it won't take the world by storm, it will be disruptive and all that. Then in another year, lower price again, etc.
  • Reply 8 of 32
    Imagine what it would be like when the real tablet is announced.
  • Reply 9 of 32
    Quote:
    Originally Posted by lkrupp View Post


    Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.



    Case in point: http://blogs.msdn.com/sprague/archiv...will-fail.aspx
  • Reply 10 of 32
    quinneyquinney Posts: 2,528member
    Quote:
    Originally Posted by lkrupp View Post


    Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.



    Ballmer doesn't giggle. He titters.
  • Reply 11 of 32
    Woo-hoo!



    I mean, Wu-who?
  • Reply 12 of 32
    newbeenewbee Posts: 2,055member
    Quote:
    Originally Posted by crees! View Post


    Case in point: http://blogs.msdn.com/sprague/archiv...will-fail.aspx



    Another perfect example of having a blog doesn't mean you know what you're talking about.
  • Reply 13 of 32
    Quote:
    Originally Posted by newbee View Post


    Another perfect example of having a blog doesn't mean you know what you're talking about.



    Did that jerkwad ever have to pay off on the bet he offered? I notice he closed the thread to further comments. Wonder if he ever had to admit how wrong he was?
  • Reply 14 of 32
    Quote:
    Originally Posted by newbee View Post


    Another perfect example of having a blog doesn't mean you know what you're talking about.



    That dear old know it all richard sprague disappeared from his blog and hasnt posted anything since june 08....I guess he really had to eat his words and would rather disappear quietly into the night instead of excusing his myopic view...
  • Reply 15 of 32
    I figure that at least $20 is priced in the stock due to the Tablet expectations. If the product is not announced in January, the stock could overreact on the downside to end below 190. What has been factored completely are blowout sales of the iPod and Macs.



    I am long, but any overreaction of the downside especially way below 190, will be a buying opportunity if it is just because of the deflation of the Tablet hype.



    Another good thing about this stock are the deferred revenues. At 190, the enterprise PE is around 15-16. At 160 the stock becomes a steal.
  • Reply 16 of 32
    cmf2cmf2 Posts: 1,427member
    Quote:
    Originally Posted by iphonedeveloperthailand View Post


    Imagine what it would be like when the real tablet is announced.



    The stock will likely dive because virtually every Apple product announcement does not meet expectations. The tablet will be no different, and it could be really bad given the huge amount of hype. Eventually people will realize the value of the features that the tablet does have though.
  • Reply 17 of 32
    Quote:
    Originally Posted by iphonedeveloperthailand View Post


    imagine what it would be like when the real tablet is announced.



    เราจะยุบทั้งหมด!
  • Reply 18 of 32
    Quote:
    Originally Posted by AjitMD View Post


    I figure that at least $20 is priced in the stock due to the Tablet expectations. If the product is not announced in January, the stock could overreact on the downside to end below 190. What has been factored completely are blowout sales of the iPod and Macs.



    I am long, but any overreaction of the downside especially way below 190, will be a buying opportunity if it is just because of the deflation of the Tablet hype.



    Another good thing about this stock are the deferred revenues. At 190, the enterprise PE is around 15-16. At 160 the stock becomes a steal.



    Set your limits and prepare to clean up!
  • Reply 19 of 32
    At this rate I wonder how long it will take for Apple's value as a company to surpass Microsoft?
  • Reply 20 of 32
    thomprthompr Posts: 1,521member
    Quote:
    Originally Posted by AppleBiter View Post


    The hype machine is working. This tablet better cure a disease.



    Why don't you read the original post a bit more carefully? The tablet was never mentioned. Wu expects that THIS WAS a blowout quarter based on terrific iPhone, iPod, and Mac sales.



    AAPL shares are going to climb with or without the rumored tablet. Analysts STILL are using an EPS of $7 for AAPL, in spite of the fact that it is known that AAPL is now allowed to account for iPhone sales immediately instead of deferring the revenue. This is going to drive the EPS to about $12, which will in turn drive all of these analysts (who are still using the old numbers) to offer upgrades.



    Adding a tablet to the product array will just be a little gravy, even if it is a modest seller (which I actually expect).



    Thompson
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