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Sterne Agee's Wu Raises Estimates on Apple (AAPL); Demand Strong and Supply Improving

December 4, 2012 12:57 PM EST Send to a Friend
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Sterne Agee's Shaw Wu raised estimates on Apple (NASDAQ: AAPL) Tuesday after checks showed iPhone supply is improving sharply.

"Consistent with our supply chain work in early November, lead times on iPhone 5 continue to improve, now at 2-4 days vs. 3-4 weeks," Wu comments. "From our understanding, this is despite still robust demand due to improving yields and thus better availability and profitability."

Wu said iPad mini appears constrained as stronger than expected sales outstrip supply while Macs likely light due to new iMac constraints.

The firm is raising iPhone unit forecast to 47.3 million units (from 46.5 million). They are leaving iPad unit forecast unchanged at 25 million units (consensus at 23-24 million) and reducing Mac outlook to 5 million (from 5.1 million) but a bit below consensus at 5.2-5.3 million. In addition, they are raising gross margin assumption to 38.5% (from 38%) due to improving yields and thus profitability of iPhone 5.

The firm is now at $54.6 billion in revenue and $13.70 in EPS (from $53.7 billion and $13.15 in EPS) vs. consensus at $54.4 billion and $13.30. For FY13, $193.4 billion and $49.50 in EPS (from $192.8 billion and $47.00 in EPS) vs. consensus at $193 billion and $49.28 in EPS and for FY14, $222.4 billion and $58.50 in EPS (from $221.2 billion and $58.00 in EPS) vs. consensus at $221 billion and $57.95 in EPS.

The firm is maintaining its Buy rating and $840 based on a 13.7x multiple on CY13 EPS of $52.53 plus $128 in net cash.

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 $586.19 yesterday.




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