FBR Capital Positive on Apple (AAPL) into Q1 Print But Trims PT

January 23, 2013 10:56 AM EST
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FBR Capital cut its price target on Apple (NASDAQ: AAPL) Wednesday but is by no means negative into today's earnings report.

The firm cut its price target from $725 to $675 but maintained an Outperform rating into Q12013 results after the close.

"While shares of Apple have been plagued this quarter by reports of order cuts to suppliers, we expect much of the supply volatility is related to Apple's attempts to diversify its manufacturing and supply chains," Scott Thompson comments. "Our checks throughout the quarter indicated exceptionally strong demand across all product segments and particularly for the iPhone 5 and iPad mini."

The analyst increased near-term units, revenue, and EPS estimates for the current quarter but decreased FY13 estimates to reflect the possibility of extended gross margin pressure from supply chain adjustments and a more competitive environment on ASPs and units.

The firm's F1Q13 revenue estimate is increasing to $56.3 billion from $54.8 billion and above the consensus $54.9 billion estimate. F1Q13 GM estimate goes up to 37.4% from 37.3%, below the consensus 38.7% estimate. F1Q13 EPS estimate improves to $13.65, up from $13.19 and above the $13.45 consensus estimate. They also decrease FY13/FY14 revenue estimates to $186 billion/$208 billion from $193 billion/$225 billion. FY13/FY14 EPS estimates fall to $46.16/$54.04 from $49.57/60.48 on more conservative ASP, units, and gross margin assumptions.

Commenting on recent speculation of a low-end iPhone, Thompson said he believes Apple may be able to generate more earnings growth from increasing the rate at which it refreshes and updates its higher-end products rather than sacrificing margin to capture low-end share.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $504.77 yesterday.

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