Apple (AAPL) /China Mobile Deal Expected by End of Year; UBS Raises Target to $560

August 21, 2013 8:08 AM EDT Send to a Friend
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(Updated - August 21, 2013 8:39 AM EDT)

UBS reiterated a Buy rating on Apple (NASDAQ: AAPL) and raised its price target to $560.00 (from $500). 2014/15 EPS estimates were raised to $44.65/$48.45 from $42.29/$45.80.

"We have rejiggered conservative assumptions in our detailed product model for the expected midrange iPhone 5C. Our price assumption increases from $379 to $399 and the gross margin rises from 32% to 38% on a lower bill of materials, making the 5C accretive to earnings," said analyst Steven Milunovich.

Milunovich thinks Apple will strike a deal with China Mobile by the end of the year.

"Based on income, we estimate the iPhone opportunity in China is at least one-third the total 3G subscriber base or over 100mn users," added Milunovich. "Our model incorporates sales of 17mn iPhones through China Mobile in F14, 70% 5C and 30% 5/5S, which adds an estimated $3.25 of EPS. Each incremental one million units would add about $0.20 per share to our estimate."

For an analyst ratings summary and ratings history on Apple (NASDAQ: AAPL) click here. For more ratings news on Apple click here.

Shares of Apple closed at $501.07 yesterday.


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