Apple shares rally on strong iPad demand

Shares of Apple climbed 3.3 percent to $265.40 in early afternoon trading on Nasdaq.

Apple said Monday it has sold more than 2 million iPads since the device debuted April 3 in the United States.

The announcement followed Friday's international iPad roll-out, which was delayed by a month as Apple worked to build enough of the devices.

The iPad went on sale in nine international markets, with eager fans standing in line overnight in Europe and Asia to get their hands on the 9.7-inch touchscreen tablet, which resembles a large iPhone and is designed for Web surfing, games and consuming digital media in all its forms.

Analysts raised their estimates and price targets on Apple on news of the iPad demand, which is tracking much better than many had expected.

Before the launch in April, many on Wall Street predicted sales of roughly 1 million iPads for the June quarter.

AAPL's business model continues to improve on a daily basis and we are raising our estimates and price target once again due to better than expected strength in iPads, wrote Broadpoint AmTech analyst Brian Marshall in a research note.

He boosted his price target to $340 from $320.

Barclays Capital analyst Ben Reitzes raised his earnings and revenue forecasts and took Apple's price target to $320 from $315.

We believe (iPad) sales would have been far greater if the company had more supply; iPads in the U.S. still show lead times of 7-10 business days -- stores have very limited supplies as well when shipments do come, he wrote in a research note.

Kaufman Bros analyst Shaw Wu raised his earnings and sales estimates for both the June quarter and fiscal 2010. He noted that there are already 5,000 iPad-only applications available.

We had believed that the key to success for the iPad would be around the development of iPad-specific apps that would take advantage and showcase its larger screen and more powerful processor. It looks like this metric has more than been met, Wu wrote.

Shares of AT&T Inc -- which provides the high-speed wireless data for the iPad in the United States -- also showed strength on Monday.

Walter Piecyk, a research analyst for New York-based broker-dealer firm BTIG, pointed to the strong iPad sales, and also anticipation over the next week's Apple event, where Chief Executive Steve Jobs is widely expected to launch the newest version of the iPhone.

I think there's an expectation Apple's going to announce a new iPhone for them next week, he said.

Shares of AT&T rose 1.8 percent to $24.73 on the New York Stock Exchange.

(Reporting by Gabriel Madway and Sinead Carew; Editing by Richard Chang)