Can Apple (AAPL) Keep The Worms Out In Q4?
Apple Inc. (NASDAQ: AAPL) shares are trading fractionally lower ahead of its fourth quarter earnings report, expected after the market closes Monday, October 19, 2009. Shares are down about 1% to $188.61.
Analysts currently expect AAPL to report quarterly EPS of $1.42 on revenue of $9.20 billion. Apple is looking for Q4 EPS of $1.18 - $1.23, on revenue of $8.7 - $8.9 billion. The 'street high' EPS estimate on Apple is $1.72.
Last quarter, AAPL beat the street EPS estimates by $0.18 and topped analyst revenue estimates by about $140 million. Apple shares have been up about 23% through Q4.
According to data from Bloomberg, 34 analysts have Buy ratings on AAPL, 4 have Holds and 2 have a Sell rating on the stock. Apple analysts have an average price target of $211.03.
With Apple's Q4 earnings announcement anon, analysts have been upgrading and downgrading and raising price targets readily over the last few weeks. Much of the activity could be attributed to the announcement that Dell will release their own Smartphone in 2010 and new revenue recognitions rules, but analysts focused more on Apple's App Store downloads, iPhone sales, and new partnerships.
BMO maintained an Outperform rating on October 5, as they noted that Apple may capitalize on new accounting rules that would allow them to recognize sales from the iPhone instantly. Previously, Apple was required to record quarterly sales from the iPhone over a 24-month period. BMO raised their
FY09 price target from $185 to $210 on the report.
Susquehanna reiterated their Positive rating for Apple, and raised their price target to $210 from $185. Susquehanna comments that they raised their estimates based on several factors: the long-anticipated iTablet in 2010, accelerated App Store downloads, better than expected Mac sales trends, slightly higher iPhone sales, and Orange picking up U.K. iPhone sales once Apple's exclusivity expires.
On October 2, 2009, UBS made a huge price increase, raising their target from $170 to $265. UBS noted greater recurring iPhone revenue, stickiness of the App Store, and iPhone expansion driven by new partnerships and exclusivities. UBS goes on that with the iPod recently being refreshed and adjustments being made to the MacBook line, they could focus on a desktop refresh next.
At the other end, Oppenheimer analysts recently commented on Apple's iPhone, saying that they believe some hiccups and snafus in Apple's manufacturing line may have cost some sales in Q409, even though Apple met its 6 million unit target. The firm recommended to buy on any downside in the stock in anticipation of a huge Q110 for Apple, citing: a gargantuan quarter for iPhone (assuming no further component issues); re-acceleration of Mac growth with the release of the new MacBook and iMacs; and the likely announcement of the tablet in early 2010.
Apple will issue its Q409 results via press release at approximately 4:30 PM
(EDT) on October 19, 2009. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
With the success of the iPhone, Apple has been cranking on all cylinders. But how much of this is already reflected in the stock? Likely a lot of it. Unless we get another blow-out quarter there could be short-term profit taking. But longer-term most agree that this stock is headed higher.
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