By IB Times Staff Reporter: Subscribe to IB's RSS feed
September 1, 2010 7:35 AM EDT
Barclays Capital reiterated its ‘overweight’ rating on iPhone maker Apple Inc. with a price target of $340.
“We continue to believe Apple's valuation is very attractive and that shares can benefit driven by strong iPad demand, a new iPhone upgrade cycle, significant international expansion and additional new products expected later this year,” said Ben Reitzes, an analyst at Barclays Capital.
The analyst said Apple is holding an event on September 1 at 10 am PT (1 pm EST) at the Yerba Buena Center in San Francisco, California. The focus of the event should be a new line of iPods and an attractive upgrade to Apple TV. The analyst expects more content around viewing TV shows and an iTunes update although we do not yet expect to see a new ‘content streaming’ version.
The analyst wouldn't be surprised to see some better integration of Apple products with MobileMe as well. The analyst looks for the event to showcase a pretty nice upgrade to the iPod family, adding cameras (and perhaps FaceTime calling) to the iPod touch, which should help re-stimulate sales into the holidays.
“Our estimates currently call for an iPod unit decline of 8 percent year-over-year in Apple’s September quarter. We believes unit sales are seeing support currently from Apple’s back to school promotion of a free iPod with qualifying Mac purchase (the better Macs do; the better iPod units should be), however we acknowledge some cannibalization impact from continued growth in the iPhone and iPad,” said Reitzes.
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While the analyst expects new products, he does not expect the event to be a big catalyst for the stock. That said, there is a possibility that Apple re-addresses iPhone 4 issues starting with a unit sales figure to date, a status update on the production issues with the white iPhone, its future plans for dealing with “Antennagate” and its bumper giveaway program.
In terms of future catalysts, the analyst sees an expansion of US carriers for the iPhone in calendar first quarter of 2011 and new iPads (with camera, later in calendar first quarter of 2011 event) as bigger catalysts down the road.
The brokerage said iPad ship times hit 24hrs on Apple.com (down from 1-3 business days last week). The brokerage views the better availability as positive as production yields appear to finally have caught up to demand. The iPad is currently shipping in 19 countries.
With the iPhone shipping in about 88 countries, the analyst believes material international iPad rollouts are still ahead. The analyst estimates iPad unit shipments of 4.32 million in Apple’s September quarter which is likely quite conservative (the iPad seems to be cannibalizing low-end notebooks more and more).
As of August 30, Apple held 8 of the top 10 MP3 player slots, 3 of the top 10 desktops and 2 of the top 10 notebooks. In terms of PCs, the netbook ASP again hovered around $300 this week ($305 vs. $306 last week), Barclays Capital said in a report to clients.
“We wouldn’t be surprised to see pricing pressure in the PC market intensify into the back to school and holiday buying seasons to stimulate PC demand. We continue to believe the iPad is cannibalizing the netbook market in the US at a significant rate,” said Reitzes.
The brokerage maintained its 2010 EPS estimate for Apple of $14.43 and its 2011 estimate of $16.92.
Apple shares closed Tuesday up 0.25 percent at $243.10 on the Nasdaq, while in after-hours the stock rose 0.43 percent to trade at $244.15.
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